According to a report by the BBC, the Trump administration has blocked the acquisition of Lattice Semiconductor transactions by Chinese investors on the grounds of national security.
China’s private equity fund, Canyon Bridge Capital Partners, made a US$1.3 billion offer to American chip maker Lattice Semiconductors. However, this transaction was blocked and many of them were "disappointed" with this decision.
This is the fourth time in 25 years that the President of the United States has stopped foreign companies from acquiring US companies because of national security issues. President Obama has used this power twice, and both cases are aimed at Chinese companies. In 1990, President Bush also prevented a Chinese company from acquiring Seattle manufacturers.
The United States launched an official review of China’s intellectual property issues last month, saying that this may prevent US companies from handing over valuable information. U.S. politicians and military leaders also urged the government to further examine China’s investment in the United States, especially in the technology industry. The White House said in a statement that the reason for such a decision was to avoid "potential transfer" of "intellectual property rights," especially since the U.S. government is also using Lattice's chip products.
The President of the United States has the power to prevent the sale of domestic companies to foreign buyers. Trump's decision is in line with a previous proposal of the U.S. government group to consider reviewing foreign transactions for national security. The core review body for such transactions is the Committee on Foreign Investment in the United States (CFIUS), which is responsible for making recommendations to the President of the United States.
Lattice, the US chip maker, has experienced losses for two years in 2015 and 2016. Laidis CEO Darin Billerbeck said that the failure of this transaction was a loss to its shareholders, employees, customers and even the United States. At present, Lattice’s share in the Chinese market accounts for the third place in sales, and the business has gradually relied on military transfers. The company also said that if the acquisition is successful, it will double employment in the United States.
However, the White House believes that "China Venture Capital Fund Co., Ltd." is owned by a Chinese state-owned organization. The fund company did not answer the question of security raised by the United States. The China Venture Capital Fund stated in an e-mail that they were disappointed with the decision made by the Trump administration. Because this is a very cost-effective deal for the U.S. shareholders and employees. However, they did not give up and will continue to seek other investment opportunities.
According to Rhodium Group's statistics, China’s investment in the United States has surged and exceeded 46 billion U.S. dollars in 2016, which is three times that of 2015. Chinese investors are expected to surpass this figure this year.
At present, several Chinese companies are reviewing the transaction applications for US companies' acquisitions, and Trump’s decision has also cast a shadow over the acquisition of Chinese companies. The transactions that are still waiting for review include Ant Financial's bid of US$1.2 billion to buy American money transfer company Money Exchange. China Panhai Holding Group is also seeking its $2.7 billion acquisition of US insurance company Genworth. In addition, politicians in the United States are also calling for refusal of other transactions with Chinese companies.
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