![]() Observers noted that these state-owned entities are linked to China's space program. Chinese government connections: The White House also specifically referenced CVCF's involvement in the transaction and the fact that CVCF is controlled by Chinese state-owned entities.President Obama cited this same concern as the basis for his December 2016 Executive Order blocking the acquisition of the US business of Aixtron SE, a German semiconductor company, by another Chinese investor, Fujian Grand Chip Investment Fund LP. Transfer of intellectual property and technology: The Executive Order and White House press release specifically referenced concerns regarding the transfer of semiconductor-related IP and technology to a foreign buyer.Based on a statement from the White House and other press reports regarding the transaction, these concerns included: ![]() The CFIUS review of the Lattice transaction lasted more than nine months, including an initial 30-day review and three consecutive 45-day investigations, during which CFIUS was unable to resolve various national security concerns with the deal. ![]() Lattice and Canyon Bridge agreed to voluntarily submit their transaction to CFIUS review before closing and included the receipt of CFIUS approval as a closing condition. Lattice reportedly considered other buyers, including a US company, but ultimately selected Canyon Bridge because of its "significantly" higher purchase offer of $1.3 billion. Lattice searched for more than a year to identify a buyer for its business before selecting Canyon Bridge Capital Partners (Canyon Bridge), a newly formed firm backed by Chinese investors, including the Chinese government-controlled China Venture Capital Fund Corporation (CVCF). Lattice's customers include the US military, although at the time of its proposed sale it had reportedly "largely exited" the defense business. Lattice's FPGA products and technology are used in a variety of commercial products, from communications networking gear to digital cameras and smartphones, including the iPhone. Lattice produces field-programmable gate array (FPGA) computer chips and associated technology, software and design kits. Third, the CFIUS process can be unpredictable and opaque, both with respect to the outcome and the timeline for review.įor these reasons, it is important for parties to understand prior to a foreign transaction when and under what circumstances the transaction may be subject to CFIUS jurisdiction and to consider how to assess and allocate potential CFIUS risks. Second, the concept of what constitutes "national security" is broad and evolving and is not limited to military- or intelligence-related activities or the acquisition of export-controlled technology. First, the US government is willing to actively intervene to modify or even prohibit foreign investments that it deems threatening to national security. ![]() The fate of the Lattice transaction illustrates a number of distinct issues with respect to the regulation of foreign investment in the United States. During its review of the Lattice transaction, CFIUS identified unresolved national security concerns, which the President determined threatened to impair US national security. The president's order blocking the transaction was based on a recommendation by the Committee on Foreign Investment in the United States (CFIUS), an interagency committee of the US government with jurisdiction to review foreign investments in US businesses for national security concerns. Last week, President Trump issued an Executive Order prohibiting the acquisition of Lattice Semiconductor Corporation (Lattice), a US computer chip manufacturer, by a Chinese investor.
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