Sun, Sep 03, 2017 - Page 16 News List

Trump to decide on China buyout of US chipmaker

Reuters

US President Donald Trump is to decide in the next two weeks whether to block a Chinese-backed private equity firm from buying a US chipmaker, putting his economic and diplomatic relations with China under a spotlight.

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

The decision, which the filing said would be made by the White House in the next 15 days, comes at a sensitive time.

Relations are already strained between Washington and Beijing over trade and North Korea, and the Chinese Communist Party is preparing to hold its once-every-five-years congress next month.

The odds are not good for Lattice. If Trump approves the transaction, it would be unprecedented. US presidents, who have the final authority on such investments, have always sided with CFIUS.

Lattice makes chips known as field programmable gate arrays, which allow companies to put their own software on silicon chips for different uses.

It no longer sells chips to the US military, but its two biggest rivals, Xilinx Inc and Intel Corp’s Altera, do.

The US is also concerned about China’s ability to acquire technologies with potential military applications.

The US Department of Defense has raised concerns about the Lattice acquisition, two US officials said on condition of anonymity.

Both officials said it was unclear whether the objections would sway Trump in the face of Chinese warnings that if deals are blocked, Sino-US relations might deteriorate further.

The move to seek Trump’s approval comes after Lattice and Canyon Bridge, funded in part by China’s central government, spent eight months trying unsuccessfully to persuade CFIUS to clear the acquisition.

A White House official declined to comment on the Lattice transaction and referred further questions to the US Department of the Treasury, which chairs CFIUS.

“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 US Securities and Exchange Commission.

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

Canyon Bridge had told CFIUS it would commit to nearly doubling the number of Lattice’s employees, said people familiar with the matter who asked not to be identified because details of the regulatory process are confidential.

Portland, Oregon-based Lattice reported 986 full-time employees worldwide at the end of December last year.

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

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