Behind the U.S. move to block Singapore-based Broadcom’s hostile bid for U.S. chipmaker Qualcomm lies a new global struggle for influence over next-generation communications technology — and fears that whoever takes the lead could exploit that advantage for economic gain, theft and espionage.

In the Broadcom-Qualcomm deal, the focus is on so-called “5G” wireless technology, which promises data speeds that rival those of landline broadband now. Its proponents insist that 5G, the next step up from the “4G” networks that now serve most smartphones, will become a critical part of the infrastructure powering everything from self-driving cars to the connected home.

5G remains in the early stages of development. Companies including Qualcomm, based in San Diego, and China’s Huawei have been investing heavily to stake their claim in the underlying technology. Such beachheads can be enormously valuable; control over basic technologies and their patents can yield huge fortunes in computer chips, software and related equipment.

“These transitions come along almost every decade or so,” said Jon Erensen, research director for semiconductors at research firm Gartner. “The government is being very careful to ensure the U.S. keeps its leadership role developing these standards.”

President Donald Trump said late Monday that a takeover of Qualcomm would imperil national security, effectively ending Broadcom’s $117 billion buyout bid. Broadcom said that it is studying the order and that it doesn’t believe it poses any national security threat to the U.S.

Higher stakes

It’s the second recent U.S. warning shot across the bow of foreign telecom makers. At a Senate Intelligence Committee meeting in February, FBI Director Christopher Wray said any company “beholden to foreign governments that don’t share our values” should not be able to “gain positions of power” inside U.S. telecommunications networks.

“That provides the capacity to exert pressure or control over our telecommunications infrastructure, it provides the capacity to maliciously modify or steal information and it provides the capacity to conduct undetected espionage,” he said.

Lawmakers in the U.S. House introduced a bill on Jan. 9 that would prohibit government purchases of telecoms equipment from Huawei Technologies and smaller rival ZTE, citing their ties to the Chinese military and backing from the ruling Communist Party. A few years earlier, a congressional panel recommended phone carriers avoid doing business with Huawei or ZTE.

The stakes are even higher in the 5G race. “Qualcomm/Broadcom is like the Fort Sumter of this technology battle,” said GBH Insights analyst Dan Ives, referring to the battle that kicked off the Civil War.

Although its name isn’t widely known outside the technology industry, San Diego-based Qualcomm is one of the world’s leading makers of the processors that power many smartphones and other mobile devices. Qualcomm also owns patents on key pieces of mobile technology that Apple and other manufacturers use in their products.

Compared to earlier generations of wireless technology, “we’re seeing China emerge and start to play a bigger role in the standards developing process,” Erensen said. Given a wave of consolidation in the telecom-equipment industry, fewer companies are involved “and the stakes are bigger,” he said.

National security

The Committee on Foreign Investment in the United States, which reviews the national security implications of foreign investments in U.S. companies, cited concerns about Broadcom’s penchant for cutting costs such as research spending. That could lead to Qualcomm losing its leadership in telecom standards, the committee wrote in a letter earlier in March.

Should that happen, Chinese companies such as Huawei, which the CFIUS has previously expressed concerns about, could take a larger, or even a dominant, role in setting 5G technology and standards and practices. That’s where national security concerns come in.

“Over time, that would mean U.S. government and U.S. technology companies could lose a trusted U.S. supplier that does not present the same national security counterintelligence risk that a Chinese supplier does,” said Brian Fleming, an attorney at Miller & Chevalier and former counsel at the Justice Department’s national security division.

Blocking the deal doesn’t eliminate Chinese influence on 5G development, of course. But it might slow it down, Fleming said: “They honestly believe they are helping to protect national security by doing this.”
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Sao Paulo investment firm SouthRock Capital has signed an agreement with Starbucks that gives it the right to develop and operate branches of the Seattle-based chain in Brazil, the companies said late on Monday.

With the agreement, whose value was not disclosed, all of Starbucks’ retail operations in Latin America are now wholly licensed rather than directly managed, the companies said.

SouthRock founder Ken Pope said in a statement the fund would eye expansion opportunities in new and existing markets.

Starbucks now has 113 stores across the populous states of Sao Paulo and Rio de Janeiro.

“With Starbucks, we see continued opportunities for growth in existing markets … as well as new markets like Brasilia and the South,” he said.

SouthRock, founded in 2015, also owns Brazil Airport Restaurants, which operates in the country’s biggest airports.

Shares in Starbucks opened up 0.5 percent but closed down 0.58 percent. The S&P 500 Index fell 0.64 percent.
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“Dona Edir, Dona Edir” — the call is heard frequently in the narrow lanes of Canaa, a slum on the outskirts of Rio de Janeiro.

It is for Edir Dariux Teixeira, who is well known among the residents, having spent more than a third of her life trying to improve infrastructure and basic services in the ramshackle settlement.

At the heart of that fight are legal property titles to the residents’ homes — or, more accurately, the lack of them.

“Without these documents we have no rights,” she told the Thomson Reuters Foundation, sitting close to a fan to alleviate the near-40C (104°F) heat funneling from her asbestos roof.

Debates on how to manage property rights in the world’s informal settlements are becoming ever more pressing, as millions of people move into cities from rural areas every year and many end up in fast-growing slums.

Rio has about 1,000 slums, known locally as favelas. They are home to nearly one in four of the city’s population and typically lack a range of infrastructure and services, experts say.

In Canaa, having title would bring certainty of tenure, and also help to get services provided: sewerage, basic sanitation, and tarred streets, said Teixeira.

“I am anxious. I pray every day [for land titles],” the 59-year-old said.

When she moved to the area 22 years ago, there was a lack of all basic infrastructure in Canaa, including clean water, pavements and lighting.

Teixeira realized change had to be driven by the residents’ themselves and took the lead in trying to improve the area.

“There was nothing here. It was all jungle,” said housewife Glaucia Milani, who has been living in the favela for 25 years. “Now things are getting better because of Dona Edir’s help.”

Milani said apart from helping residents to get legal title to their land, Teixeira has been organising food and clothes donations for the favela and its 300 families.

“Dona Edir is a great mother to us. Anything she can help us, she helps… Dona Edir solves everything for us,” Milani, 31, said. “Dona Edir is a warrior.”

Complex situation

Getting land titles for the residents is no easy task, Teixeira said, not least because some residents have bought land from private owners, while others are squatting.

Her own plot of land was donated by an uncle of her ex-husband but neither Teixeira nor the other residents have official proof of ownership.

ITERJ, the government body in charge of managing land in the state of Rio de Janeiro and responsible for Teixeira’s request to get titles for Canaa’s residents, did not respond to requests for comment.

Most of the favela’s streets got temporary pavements about five years ago but Teixeira said it happened only after she asked a politician for help because taxis were refusing to enter Canaa because the roads were full of potholes.

Despite Teixeira’s efforts, the residents in the favela about 65 kilometers (40 miles) from Rio’s city center are still waiting for the streets to be fully paved, sidewalks to be built and manholes to be constructed.

Teixeira has asked the city to fully pave the streets, provide sewerage infrastructure and a health post for the favela.

In emailed comments to the Thomson Reuters Foundation, Rio’s city hall said the favela was “urbanized” four years ago but did not immediately respond to requests for details about which services were provided to the area.

Fighting for justice

A “very shocking scene” at school when Teixeira was eight years old prompted her decision to dedicate her life to fighting justice, she said.

While she and a boy were having a snack during a school break, another girl asked the boy to give her a piece.

“The boy said: only if you spread your legs,” she said. “Then she immediately spread her legs and … he gave her a bite. That broke my heart.”

At 15, Teixeira was raped and later witnessed the rape of a friend, experiences she said strengthened her resolve to help women.

Teixeira has been working for many years as a volunteer at a charity that distributes food in Rio’s poor neighborhoods, including Canaa.

She was honored for her work with a prize from the Federação de Mulheres Fluminenses, a Rio-based women’s federation.

Meanwhile, Teixeira, who survives on her father’s pension and cleans houses to make money, spends whatever she can of her income — equivalent to $300 a month — on building a school in the patio of her house.

“I do the construction works myself. When there is any money left I pay a professional to do the harder things,” she said.

Beyond literacy, her school will offer a range of classes: cooking, sewing, handicrafts and theater.

“That is my dream. … My dream is to take the kids off the street … because they have nothing to do [here],” she said in tears.

“There are lots of volunteers. What is missing is money to finish the school.”

Teixeira hopes the city will officially recognize Canaa as the favela’s name — it is the Portuguese version of Canaan and was chosen by her in reference to a passage from the Bible of a land promised by God to chosen people.

“We have to have faith. The faith in God is what keeps me standing. And the victories make me keep going,” said Teixeira.
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The daily commute from Mexico to California farms is the same as it was before Donald Trump became president. Hundreds of Mexicans cross the border and line the sidewalks of Calexico’s tiny downtown by 4 a.m., napping on cardboard sheets and blankets or sipping coffee from a 24-hour doughnut shop until buses leave for the fields.

For decades, cross-border commuters have picked lettuce, carrots, broccoli, onions, cauliflower and other vegetables that make California’s Imperial Valley “America’s Salad Bowl” from December through March. As Trump visits the border Tuesday, the harvest is a reminder of how little has changed despite heated immigration rhetoric in Washington.

Trump will inspect eight prototypes for a future 30-foot border wall that were built in San Diego last fall. He made a “big, beautiful wall” a centerpiece of his campaign and said Mexico would pay for it.

But border barriers extend the same 654 miles (1,046 kilometers) they did under President Barack Obama and so far Trump hasn’t gotten Mexico or Congress to pay for a new wall.

Trump also pledged to expand the Border Patrol by 5,000 agents, but staffing fell during his first year in office farther below a congressional mandate because the government has been unable to keep pace with attrition and retirements. There were 19,437 agents at the end of September, down from 19,828 a year earlier.

In Tijuana, tens of thousands of commuters still line up weekday mornings for San Diego at the nation’s busiest border crossing, some for jobs in landscaping, housekeeping, hotel maids and shipyard maintenance. The vast majority are U.S. citizens and legal residents or holders of “border crossing cards” that are given to millions of Mexicans in border areas for short visits. The border crossing cards do not include work authorization but some break the rules.

Even concern about Trump’s threat to end the North American Free Trade Agreement is tempered by awareness that border economies have been integrated for decades. Mexican “maquiladora” plants, which assemble duty-free raw materials for export to the U.S., have made televisions, medical supplies and other goods since the 1960s.

“How do you separate twins that are joined at the hip?” said Paola Avila, chairwoman of the Border Trade Alliance, a group that includes local governments and business chambers. “Our business relationships will continue to grow regardless of what happens with NAFTA.”

Workers in the Mexicali area rise about 1 a.m., carpool to the border crossing and wait about an hour to reach Calexico’s portico-covered sidewalks by 4 a.m. Some beat the border bottleneck by crossing at midnight to sleep in their cars in Calexico, a city of 40,000 about 120 miles (192 kilometers) east of San Diego. 

Fewer workers make the trek now than 20 and 30 years ago. But not because of Trump. 

Steve Scaroni, one of Imperial Valley’s largest labor contractors, blames the drop on lack of interest among younger Mexicans, which has forced him to rely increasingly on short-term farmworker visas known as H-2As. 

“We have a saying that no one is raising their kids to be farmworkers,” said Scaroni, 55, a third-generation grower and one of Imperial Valley’s largest labor contractors. Last week, he had two or three buses of workers leaving Calexico before dawn, compared to 15 to 20 buses during the 1980s and 1990s.

Crop pickers at Scaroni’s Fresh Harvest Inc. make $13.18 an hour but H-2As bring his cost to $20 to $30 an hour because he must pay for round-trip transportation, sometimes to southern Mexico, and housing. The daily border commuters from Mexicali cost only $16 to $18 after overhead.

Scaroni’s main objective is to expand the H-2A visa program, which covered about 165,000 workers in 2016. On his annual visit to Washington in February to meet members of Congress and other officials, he decided within two hours that nothing changed under Trump. 

“Washington is not going to fix anything,” he said. “You’ve got too many people – lobbyists, politicians, attorneys – who make money off the dysfunction. They make money off of not solving problems. They just keep talking about it.”

Jose Angel Valenzuela, who owns a house in Mexicali and is working his second harvest in Imperial Valley, earns more picking cabbage in an hour than he did in a day at a factory in Mexico. He doesn’t pay much attention to news and isn’t following developments on the border wall.

“We’re doing very well,” he said as workers passed around beef tacos during a break. “We haven’t seen any noticeable change.”

Jack Vessey, whose family farms about 10,000 acres in Imperial Valley, relies on border commuters for about half of his workforce. Imperial has only 175,000 people and Mexicali has about 1 million, making Mexico an obvious labor pool.

Vessey, 42, said he has seen no change on the border and doesn’t expect much. He figures 10 percent of Congress embraces open immigration policies, another 10 percent oppose them and the other 80 percent don’t want to touch it because their voters are too divided.

“It’s like banging your head against the wall,” he said. 
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Chile’s new government is preparing belt-tightening measures after inheriting a larger-than-anticipated fiscal deficit from its predecessor, but the measures will stop short of “mega-adjustments,” Finance Minister Felipe Larrain said on Monday.

Conservative billionaire Sebastian Pinera took office on Sunday vowing to combat economic “stagnation” and calling for a return to “fiscal equilibrium” as he seeks to transform Chile into a developed nation within a decade.

“We’re in a period of tight budgets, with levels of public debt that have doubled, which means we must begin with austerity measures, followed by a reassigning resources, in order to finance the president’s program,” Larrain told reporters as he entered the finance ministry for his first day on the job.

Shortly before leaving office, outgoing President Michelle Bachelet’s government reported it had left a fiscal deficit of 2.1 percent of gross domestic product, instead of 1.7 percent as targeted.

Chile’s Congress this year authorized an increase in public spending of 3.9 percent, which Pinera had previously criticized as “high.”

“These austerity measures, and the wise use of resources, are always welcome and are necessary. But we’re not talking about mega-adjustments, we’re talking about austerity measures,” Larrain said.

During his campaign, Pinera, who also governed from 2010 to 2014, said he hoped to guide the country to fiscal equilibrium within six to eight years.
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U.S. President Donald Trump is blocking Singapore-based Broadcom, maker of computer and smartphone chips, from taking over U.S. chipmaker Qualcomm.

Trump cited national security grounds in stopping the takeover, following the recommendation of the Committee on Foreign Investment in the United States (CFIUS). The committee reviews national security implications when foreign entities purchase U.S. corporations.

The president’s order said there is “credible evidence” that the takeover “might take action that threatens to impair the national security of the United States.”

Broadcom made an unsolicited bid last year to take over Qualcomm for $117 billion.

The company has been in the process of moving its legal headquarters from Singapore to the United States to help it win approval for the takeover.

Qualcomm, which is based in San Diego, has emerged as one of the biggest competitors to Chinese companies, such as Huawei Technologies, making it an attractive asset for potential buyers in the semiconductor industry.

Companies in the industry are racing against each other to develop 5G wireless technology to transmit data at faster speeds.
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