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Financial Times / Biz - Money

Lattice Semiconductor: criss-cross off

Kudos to the Lattice Semiconductor advisers who thought Donald Trump might salvage a sale of the company to a Chinese bidder even after it had been blocked on national security grounds.

Unsurprisingly, the president, whose recently departed chief strategist believes the US is losing an “economic war” with China thanks to appropriated technology, demurred, with the final decision landing on Wednesday evening.

Shares in Lattice had already sagged 27 per cent as chances waned of a $1.2bn sale to Chinese-backed Canyon Bridge Capital Partners and lost another 2 per cent in post-market trading as the White House administered the coup de grâce.

By refusing to accept the verdict of the Committee on Foreign Investment in the United States, which polices proposed transactions of sensitive companies by foreign acquirers, and demanding the president weigh in, Lattice has done the rest of us a service.

We now know for certain that Mr Trump’s love of preserving American jobs can be overwhelmed by his desire to block China — even in a minor chess move. Lattice, after all, is hardly on the bleeding edge of chip technology. Its $400m of revenues are mainly derived from selling circuits for consumer devices such as smartphones; a third of revenues already come from China. It used to supply military-grade technology but sold that business in 2011. And it does not own a semi fabrication plant.

Lattice now joins Western Digital, Micron and Fairchild among US semiconductor companies whose investments from or acquisitions by Chinese bidders have run aground on — real or, in some cases, conveniently exaggerated — opposition from the US government.

The message is clear to chip companies. The question now is how far Mr Trump and his team will go to block other acquisitions, which lack even a fig leaf of national security risk. One transaction under review is the acquisition by Chinese conglomerate HNA of a majority stake in SkyBridge Capital. This is merely a hedge fund of funds, which happens to be founded and partly owned by Mr Trump’s shortlived communications director Anthony Scaramucci.

The deal is supposed to close by the end of the month but has been stuck at Cfius since January. If that is vetoed, the prospect of any significant Chinese-US M&A for the next three years is bleak.

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