US stops sale of American chip manufacturer to China-backed group
The US has stopped the sale of an American company to a Chinese-backed firm citing security concerns. An order has been issued against the acquisition of Lattice Semiconductor Corporation by China Venture Capital Fund Corporation Limited (CVCF), among others. The Defense Production Act allows the president to suspend/cancel foreign acquisitions if there's proof that it threatens security, White House Press Secretary Sarah Sanders said.
Which are the companies involved?
CVCF is owned by Chinese state entities that manage venture capital and industrial investments. Meanwhile, Lattice, a publicly traded company headquartered in Oregon, manufactures semiconductors. The primary products are programmable logic chips, whose attributes can be changed using software. Lattice's customer base includes retail consumers, industrial markets, the communications industry and even the military. Over 70% of its revenue is generated in Asia.
What risks were flagged?
According to Sanders, "Risks posed by the transaction relates to the potential transfer of intellectual property to the acquirer, Chinese government's role in supporting this transaction, the importance of semiconductor supply chain integrity to the US, and the use of Lattice products by the US."
Are there other similar "risky" deals?
This was the fourth time in 25 years that a US president stopped the foreign takeover of a domestic firm. The Trump administration is reviewing the proposed sale of MoneyGram International to Ant Financial controlled by China's Jack ma. An ongoing deal between Chinese conglomerate HNA Group Co. and SkyBridge Capital LLC, founded by former White House communications director Anthony Scaramucci, is under examination.
What does China have to say about it?
Spokesperson of the Chinese Ministry of Commerce Gao Feng said the sale was a corporate decision. "Conducting security checks on a sensitive investment is a nation's legitimate right, but it shouldn't be used as a protectionist tool," Gao added.