The Art of the Deal-killer
Oregon-based Lattice Semiconductor Corp hoped to sell itself to a Chinese-backed private equity fund called Canyon Bridge. That deal, it turns out, was a canyon too wide, and a bridge too far. After CFIUS (the Committee on Foreign Investment in the U.S.) gave a thumbs-down over security concerns, earlier this month, Lattice took its case to Donald Trump, arguing that the deal would create American jobs. Trump upheld CFIUS’s recommendation.
It’s tempting to see this in the context of Trump’s displeasure with Beijing over its role in watering down North Korea sanctions, or a sop thrown to the economic nationalists still left in the White House. But there’s no evidence that this was driven by techno-nationalism, nothing to suggest that anything more than security concerns were involved either on the part of CFIUS or Trump. Indeed it’s a safe bet that in that other parallel universe, where Hillary Clinton won in November — the same month the intended sale of Lattice to Canyon Bridge was announced — the result would have been the same: CFIUS would have seen this as problematic from a security standpoint and would have made the same recommendation, and had she been asked to weigh in, President Clinton would have killed it.
China’s reaction to this was also quite mild. In his response to the deal’s demise, Ministry of Commerce spokesman Gao Feng resisted labeling this as an instance of protectionism. Even if Beijing does believe there was some protectionism at work here, it is no stranger at all to having its ostensible security concerns read that way. China’s cybersecurity law, which went into effect this summer, has been widely seen as having an ulterior motive.
A better if still imperfect test for vindictive motives may come if CFIUS recommends against Alibaba founder Jack Ma, whose company Ant Financial intends to acquire MoneyGram.
Meanwhile, a more welcome investment from Chinese companies may be in the works. Caixin reports that Great Wall, the Chinese carmaker that announced plans in March to build a plant in the U.S., now says that two more unnamed Chinese automakers will be joining forces to build this factory to manufacture vehicles in the States — the world’s second-biggest auto market.