US President Donald Trump's decision to stall Singapore-based Broadcom from pursuing a takeover of San Diego-based Qualcomm has left many puzzled.
Trump on Monday blocked Broadcom's bid for Qualcomm, saying it might "impair the national security" of the country.
According to an editorial in The San Diego Union-Tribune, while Qualcomm's health is vital for San Diego's image and economy, big questions remain.
"If the decision was prompted by Trump's deep skepticism about international trade and Fortress America instincts, that is less defensible and could haunt US companies in their international dealings," said the editorial.
As the State Department website notes, the US and Singapore have long enjoyed "an expansive and enduring relationship based on mutual economic interests, robust security and defense cooperation".
"When the president comes to San Diego on Tuesday, an explanation of his decision is needed - not just by residents but by nations that see themselves as US allies," the editorial read.
According to the editorial, Trump's move will be cheered by the Qualcomm executives who opposed the bid and welcomed by the 13,000 local Qualcomm workers whose jobs may have been in jeopardy with a new owner.
According to Broadcom, it is "reviewing" the order and "strongly disagrees" that its would-be acquisition poses national security risks.
Qualcomm, however, said it will reconvene its annual stockholders meeting on March 23 to discuss the situation.
According to the letter from the Committee on Foreign Investment in the US, the takeover would pose too great a security risk.
"If Broadcom bought Qualcomm, CFIUS argued, it would likely cut costs at the American company and weaken its ability to compete against Chinese rivals like Huawei," Engadget reported, citing the letter.
"That, in turn, would let China dominate 5G wireless and leave Americans vulnerable," it added.
Trump's decision to stall the merger comes amid rumours that Intel is believed to be considering making a bid for Broadcom.
--IANS
na/vd
Disclaimer: No Business Standard Journalist was involved in creation of this content
