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Trump blocks China-backed Lattice Semiconductor buyout


The Trump administration has blocked the purchase of a US semiconductor company by a Chinese investment firm, citing national security concerns.

The White House said on Wednesday that it would not allow Canyon Bridge Capital, a fund backed by China Venture Capital, to acquire Lattice Semiconductor, a US chipmaker, out of fears that the deal "might take action that threatens to impair the national security of the United States."

Based out of Portland, Oregon, Lattice specializes in the production of FPGA hardware, wireless radio chips, and video chips. The company said back in November 2016 it had agreed to sell to Canyon Bridge in a $1.3bn package that valued Lattice shares at $8.30 each.

The issue, it seems, was that handing over control of the chipmaker and its patent holdings to China would present a security risk should Chinese authorities wish to tamper with the FPGAs Lattice sells in the US.

"The national-security risk posed by the transaction relates to, among other things, the potential transfer of intellectual property to the foreign acquirer, the Chinese government's role in supporting this transaction, the importance of semiconductor supply chain integrity to the United States Government, and the use of Lattice products by the United States Government," the White House said in a statement announcing the move.

The President's decision to kill the deal had been widely expected since September 1, when the Treasury Department's Committee on Foreign Investment in the United States advised against approving the merger.

Despite the committee's opposition to the merger, Lattice said earlier this month it was hopeful it could get the deal done, telling the SEC that "Lattice remains of the view that the proposed transaction does not raise any national security concerns that cannot be addressed by the comprehensive mitigation measures that Lattice and Canyon Bridge have proposed to implement."

Lattice Semiconductor shares were up slightly in after-hours trading, though the $5.77 price remains well below what Canyon Bridge had offered to pay. ®

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