Trump blocks Chinese-backed Canyon Bridge Capital Partners' acquisition of US chipmaker

US president Donald Trump yesterday blocked an acquisition attempt by a Chinese-backed private equity firm of a US chipmaker, in a clear signal to Beijing that Washington will oppose deals that involve technologies with potential military applications.

Canyon Bridge Capital Partners' planned $1.3 billion acquisition of Lattice Semiconductor Corp was among the largest attempted by a Chinese-backed firm in the US chip sector and the first announced deal for the Palo Alto, California-based firm, which launched last year with a focus on technology investments.

US regulatory scrutiny has sharpened after Reuters reported in November that Canyon Bridge was funded partly by cash from China's central government and was indirectly connected to its space programme.

The deal also saw US defence officials raise concerns. The Portland, Oregon-based company makes field-programmable gate arrays, which allow companies to put their own software on silicon chips for different uses. Lattice no longer sells chips to the US military, but rivals, Xilinx Inc and Intel Corp's Altera, do.

Trump's executive order calls on Lattice and Canyon Bridge to ''take all steps necessary to fully and permanently abandon the proposed transaction,'' within 30 days.

According to commentators, the announcement comes as US-China relations are already strained over North Korea.

"Credible evidence leads me to believe" the buyers of Lattice "might take action that threatens to impair the national security of the United States," Trump said in his order.

A statement from the White House press secretary referred to the importance of "semiconductor supply chain integrity" to US security, the role of the Chinese government in supporting the transaction and the potential transfer of intellectual property to a foreign buyer.

Chinese-owned Ralls Corp was blocked by the Obama administration from building a wind farm near a naval base in Oregon in 2012 and in 2011 China's Huawei Technologies Ltd dropped its planned purchase of 3Leaf Systems after the US security panel objected to the deal.