President Trump has personally blocked a bid by a Chinese-backed private equity fund for US chipmaker Lattice Semiconductor (13 September).
The $1.3bn bid by Canyon Bridge Capital Partners, which would have been one of the largest acquisitions in the sector, was initially subject to a review by the Committee on Foreign Investment in the United States (‘CFIUS’), which scrutinises deals proposed by foreign investors for security threats. When CFIUS rejected the deal on national security grounds, Lattice appealed to Trump, who followed CFIUS’s recommendation to block the deal.
Lattice manufactures field-programmable gate arrays (‘FPGAs’), which allow purchasers to customise computer chips with their own software. These can be used in weapons and defence systems.
The bid was blocked under s721 of the Defense Production Act 1950, which allows the President to deny acquisitions of US businesses by foreign entities where there is ‘credible evidence’ that actions by the purchaser may threaten national security. The White House stated that: ‘CFIUS and the President assess that the transaction poses a risk to the national security of the United States that cannot be resolved through mitigation.’
According to the White House, the national security risk arose from the ‘potential transfer of intellectual property to the foreign acquirer’. The Chinese government’s role in the transaction and the importance of supply chain integrity in the US semiconductor industry was also cited, as well as the use of Lattice products by the US government.
For Secretary of State Steven Mnuchin’s statement see:
For the White House statement see:
WorldECR’s sister publication, Trade Security Journal, reports on CFIUS and other national security-related investment issues and regulatory developments. For more information, visit www.tradesecurityjournal.com