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Trump administration has blocked an attempt by a Chinese company to acquire a U.S. technology company citing national security concerns. The tough stance against China continues under the Trump administration which has already undertaken several investigations with regard to China’s trade practices. U.S. commerce department has already unveiled countervailing duties on Chinese imports of aluminium foil, tool chests, and cabinets and launched an investigation into China’s IPO laws and practices. On Wednesday, Trump issued an executive order through the Defense Production Act of 1950, denying the Chinese-backed private equity firm Canyon Bridge Capital Partners from acquiring US-based chip maker Lattice Semiconductor Corporation for $1.3 billion.
Treasury Secretary Steven Mnuchin released a statement with regard to the order,
“Today, consistent with the Administration's commitment to take all actions necessary to ensure the protection of U.S. national security, the President issued an order prohibiting the acquisition of Lattice Semiconductor Corporation (Lattice) by Canyon Bridge Fund I, LP (CBFI); CBFI's subsidiaries; CBFI's limited partner, Yitai Capital Limited (Yitai); and Yitai's parent company, China Venture Capital Fund Corporation Limited (CVCF) (together, the Purchasers). The order directs the Purchasers and Lattice to take all steps necessary to fully and permanently abandon the proposed acquisition of Lattice not later than 30 days after the date of the order.
CVCF is a Chinese corporation owned by Chinese state-owned entities that manages industrial investments and venture capital. Lattice is a publicly traded company headquartered in Oregon that manufactures semiconductors for the consumer, communications, and industrial markets. Lattice's primary semiconductor product lines are programmable logic devices, which are general purpose semiconductors that customers can program to provide functionality similar to chips that are designed and produced for specific applications.
The President took this action pursuant to section 721 of the Defense Production Act of 1950, as amended by the Foreign Investment and National Security Act of 2007 (Section 721). Section 721 authorizes the President to suspend or prohibit certain acquisitions of U.S. businesses by foreign persons where he finds that there is credible evidence that the foreign interest exercising control might take action that threatens to impair national security, and where provisions of law other than Section 721 and the International Emergency Economic Powers Act do not provide adequate and appropriate authority to protect national security in the matter under review.” Here is a link to the full statement, https://www.treasury.gov/press-center/press-releases/Pages/sm0157.aspx
Later that evening, President Trump tweeted in favor of his tax proposal, citing China’s 15 percent tax rate, “China has a business tax rate of 15%. We should do everything possible to match them in order to win with our economy. Jobs and wages!”
Due to China’s continuing interest in Silicon Valley investments, the US has taken steps to strengthen the role of the Committee on Foreign Investment in the United States (CFIUS), an inter-agency committee that reviews foreign acquisitions of companies in the US on national security grounds.
