On Wednesday, Trump issued an executive order blocking the $1.3 billion acquisition of Lattice by Canyon Bridge Capital Partners - a Chinese government-financed firm - stating there is "credible evidence" leading him to believe that the Chinese firm could "take action that threatens to impair the national security of the United States". Canyon Bridge is also US -based, but its funding is China-based. Then in August, he directed the U.S. Trade Representative to consider investigating China over suspected intellectual-property theft.
Editor's Remarks: This is only the fourth time in 27 years that a US President has blocked a foreign takeover on national security grounds.
The outcome of the Lattice case does not mark a decisive change in USA investment policy or CFIUS practice and successful acquisitions are still possible.
The state news outlet said in a commentary on Saturday that "Chinese investment is not a Trojan horse" and that Trump's decision to block a deal was "penny wise and pound foolish".
The national-security risks posed by the deal included "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. Accordingly, non-U.S. investments in any segment of the semiconductor industry (or in any advanced technology company) merits caution and planning.
News reports and President Trump's decision indicate that Lattice's products and technologies had been and were being used in specific military applications. The message is clear, Lattice is not allowed to be sold to a Chinese company.
Lattice was Canyon Bridge's first acquisition target. Canyon Bridge is investing on behalf of a Chinese venture-capital fund that is sponsored by China Reform Fund Management, a state-owned asset manager. Chinese investors should assume that the CFIUS process could take six months or more to complete from the date a deal is signed.
And the Trump administration wasn't too keen on having a US government's supply of chips partly relying on a foreign power.
"Any transaction or other device entered into or employed for the objective of, or with the effect of, avoiding or circumventing this order is prohibited", says the official White House Order.
Trump has expressed concern about the status of USA manufacturing and its ability to meet national security needs. "Lattice's future remains bright".