Deal for Oregon tech firm faces new politics

The sale of an Oregon-based technology company to Chinese state-owned enterprises faces a review by a US government panel in a new political environment under US President Donald Trump.

The purchase... could disrupt the [US] military supply chain.” US lawmakers’ 2016 letter to then Treasury Secretary Jack Lew

In November, Lattice Semiconductor Corp in Portland agreed to be acquired by Canyon Bridge Capital Partners for $1.3 billion. In a US regulatory filing last month, Lattice emphasized that Canyon Bridge’s investors are Chinese state-owned enterprises.

Christopher Rolland, an analyst with Susquehanna Financial Group, a market maker in the securities of Lattice, said having Chinese SOEs as investors “definitely is a sticking point” when the deal is considered by CFIUS, or the Committee on Foreign Investment in the United States. It is made up of representatives from several federal agencies, including the departments of Treasury, Defense, State and Homeland Security. It reviews foreign acquisitions, mergers and takeovers of US businesses to assess national security concerns.

In light of the new political environment in Washington, Rolland believes the transaction has a 50-50 chance of gaining CFIUS approval. In November, he wrote in a research note that “the Donald could ultimately decide the fate of the deal”, referring to President Trump.

In the presidential campaign, Trump was critical of China.

Lattice’s main product is a computer chip called a field programmable gate array or FPGA, which are chips that can be programmed after they are manufactured. Rolland said Lattice’s FPGAs are used in the low end of the market while competitors Xilinx Inc and Intel Corp’s Altera produce chips that are used in higher-end military applications. Lattice doesn’t sell chips to the US military.

Last year, more than 20 members of Congress, including one from Oregon, wrote to then Treasury Secretary Jack Lew urging the blockage of the Lattice acquisition over security concerns.

“FPGA technologies are critical to American military applications, and the purchase of an American FPGA designer and manufacturer by a (Chinese)-affiliated firm could disrupt the military supply chain and possibly lead to a reliance on foreign-technologies for many critical Defense Department programs,” the lawmakers wrote.