The Trump Administration in the US has blocked the sale of Lattice Semiconductor to a Chinese venture capital group.
Lattice Semiconductor is a manufacturer of FPGA hardware, wireless radio chips, and video chips based in Portland, Oregon.
Canyon Bridge Capital, a group linked to China Venture Capital had originally agreed to acquire all of Lattice Semiconductor for a total price of $1.3bn.
The White House, however, decided that this purchase would give too much control over certain industries to bodies linked to the Chinese Government.
In an order released by the president, the deal was blocked on national security grounds.
“There is credible evidence that leads me to believe that Canyon Bridge Merger Sub, Inc […] might take action that threatens to impair the national security of the United States,” Trump’s presidential order read.
The specific risk involved in the deal apparently related to the prospect of the chips being produced by the company being tampered with or otherwise compromised.
“The national-security risk posed by the transaction relates to, among other things, the potential transfer of intellectual property to the foreign acquirer, 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,” said Press Secretary Sanders in a statement.
A major concern for some years now has been that Chinese chips used in a wide array of civilian and military products could contain code or hardware which would compromise them in wartime.
Such a threat, known as ‘hardware hacking’ can only be avoided through the use of US-manufactured chips for military systems.
With this in mind, the US government likely decided that protecting one of the few US-based manufacturers of these systems was in its strategic interest.
The announcement of the blocking of the deal did not cause a significant variation in Lattice’s stock price, likely because markets already had assumed the deal was dead in the water following earlier Treasury Department advice.