Decision On Blocking China-Backed Buyout Of US Chip Maker To Be Taken By Trump Soon

President Donald Trump’s economic and diplomatic relations with China will be put under a spotlight when he decides in the next two weeks whether to block a Chinese-backed private equity firm from buying a U.S. chip maker.

Gambling that the former real estate dealmaker will approve the tie-up against the advice of the Committee on Foreign Investment in the United States (CFIUS), which scrutinizes foreign deals for national security concerns, Lattice Semiconductor Corp. said in a filing Friday it will seek Trump’s approval for its proposed $1.3 billion sale to Canyon Bridge Capital Partners.

The decision would be made in the next 15 days by the White House, the filing said. it comes at a time when the Chinese communist party is preparing to hold its once-every-five-years congress next month and relations are already strained between Washington and Beijing over trade and North Korea.

For Lattice, the odds are not good. It would be unprecedented. if Trump approves the transaction. U.S. presidents have always sided with CFIUS and presidents have the final authority on such investments.

Companies are allowed to put their own software on silicon chips for different uses by field programmable gate arrays, which are the kind of chips that Lattice makes. The two biggest rivals, Xilinx Inc. and Intel Corp.’s Altera, sells ships ot the U.S. military even though Lattice no longer does so.

China’s ability to acquire technologies with potential military applications is also an area of concern for the U.S. Sources have said that the U.S. Department of Defense has raised concerns about the Lattice acquisition.

It has been eight months that unsuccessful attempts to trying to persuade CFIUS to clear the acquisition by Lattice and Canyon Bridge, funded in part by Chinas central government, and the move to seek Trump’s approval follows those attempts.

U.S. efforts to prevent the transfer of sensitive technology to China is underscored by the deal’s problems. Leading to some deals being quashed in recent years, Chinese suitors have faced intense regulatory scrutiny in their pursuit of U.S. chip makers.

“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 said in its filing with the U.S. Securities and Exchange Commission.

Canyon Bridge supports Lattice’s decision and believes “President Trump will recognize the benefits this investment will provide — to keep and grow jobs in the U.S. as well as expand Lattices product portfolio,” it said in a statement.

According to people familiar with the matter, Canyon Bridge had told CFIUS it will commit to almost doubling the number of Lattice’s employees. At the end of December, 986 full-time employees worldwide were reported by Portland, Oregon -based Lattice.

With the panel informing Canyon Bridge and Lattice it would recommend Trump block the acquisition if they take it to him for review, the latest 75-day CFIUS review of the Lattice deal, the third since it was announced in November, ended this week.

(Adapted from CNBC)


Categories: Economy & Finance, Regulations & Legal, Strategy

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