Feb 23

Lawmakers want to block Lattice Semiconductor’s sale to Chinese investors

By Mike Rogoway | The Oregonian/OregonLive 
on January 23, 2017 at 5:02 AM, updated January 26, 2017 at 6:50 AM

Lattice Semiconductor acknowledged late Friday that the mysterious investment firm trying to buy the Portland company is backed by the Chinese government.

The disclosure, in a report on the transaction filed Friday evening, is no surprise: Investment analysts have suspected as much since Lattice announced the $1.3 billion deal in November.

But both Lattice and its suitor, a newly established firm called Canyon Bridge Capital Partners, had previously said little more than that money for the deal comes from China.

The Chinese connection could be an obstacle to getting federal sign-off on the deal, as Lattice acknowledges in Friday’s filing. The transaction faces review by the Committee on Foreign Investment in the United States and, ultimately, President Donald Trump, for potential national security implications.

Lattice makes a computer chip called a field programmable gate array, which plays a supporting role in many devices, from smartphones to digital cameras to communication networking equipment.

The Portland company’s technology is at the low end of the FPGA market, and it moved to get out of the defense industry six years ago. That could improve chances of the deal going through.

On the other hand, a panel appointed by the Obama administration warned earlier this month of “a concerted push by China to reshape the (semiconductor) market to favor their needs threatens the competitiveness of U.S. industry and the national and global benefits that an innovative U.S. industry brings.”

And throughout his presidential campaign, Trump repeatedly denounced China for perceived threats to the United States economy and national security.

In Friday evening’s amended investor proxy, Lattice described Canyon Bridge in more detail than it had in prior filings. It said Canyon Bridge’s investors “are Chinese state-owned enterprises, and like all other Chinese state-owned enterprises, are ultimately owned by the Chinese government.”

Lattice declined to comment on the updated proxy or explain why it’s disclosing more about Canyon Bridge now. The company said the filing speaks for itself.

Neither Lattice nor Canyon Bridge have addressed why China is so interested in the relatively small Portland tech company. In earlier proxy filings, Lattice disclosed that several organizations in China had inquired about buying the company but that U.S. businesses showed little interest in a deal.

Susquehanna Financial Group analyst Christopher Rolland has said he believes China wants to buy chip companies in other countries to help boost its own semiconductor industry.

Lattice shares closed Friday at $7.12, well below Canyon Bridge’s $8.30 offer price. That suggests investors continue to doubt the deal will close.

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