Donald Trump has blocked an effort by China to buy Lattice Semiconductor. CFIUS (Committee on Foreign Investment in the US) a Federal Panel that looks into foreign investments in the US with possible national security implications, did not approve the transaction. The Chinese backed effort to buy Lattice Semiconductor offered a massive $1.3 billion.
Executive Order to Stop Lattice Semiconductor
China cannot buy Lattice Semiconductor because of Trump’s Executive Order. The Executive Order asks Lattice Semiconductor to take all required steps to ensure that it is abandoning the transaction. Furthermore, Trump stated that he has credible evidence to believe that this deal would have impaired the US national security.
Frosty Relations May Have Impacted the Deal
The US may have stopped China to buy Lattice Semiconductor due to the recent tensions between the two countries. The US and China already have disagreements on many issues. Two of the most prominent points of difference include the North Korean conflict and trade.
Why the US Asked China Not to Buy Lattice Semiconductor?
The US has its concerns because of which it does not want China to buy Lattice Semiconductor. The firm behind the buy, Canyon Bridge, is funded partly by the Chinese Government. Furthermore, sources claim, the firm is somehow indirectly linked to the Chinese Space Program.
A recent White House statement says that there is a high risk of transfer of technology to the Chinese Government. White House believes the transaction is funded partly by the Chinese Government. Therefore, the Trump Administration concludes that the deal may result in the transfer of sensitive intellectual property rights.
A Bit About Lattice Semiconductor
Lattice manufacturers chips commonly known as programmable gate arrays. They enable companies to install their software on silicon chips. The company is no longer dealing with the US military in buying or selling the chips. It has two competitors Corp’s Altera and Xilinx Inc. that do sell chips to the US army.
Eight Month Long Campaign to Buy Lattice Semiconductor
The two companies behind the deal, Lattice Semiconductor, and Canyon Bridge have been trying for the last eight months to convince CFIUS. Both of these firms maintain that the deal does not pose a national security risk to the US. Furthermore, Lattice Semiconductor also vowed to double the number of employees to make the deal more attractive.
The deal to buy Lattice Semiconductor was the first one that reached Trump’s desk. The US has denied four deals in the last three decades because of different concerns raised by CFIUS. China is proactively making deals in the EU and the US, most of which usually do not come under scrutiny.
China’s Response to the Executive Order
Chinese authorities said that it is the country’s right to examine sensitive areas for investment. However, it indicated that the US must not use this as a tool for imposing its protectionist policies.