The acquisition plan of the global private equity fund Canyon Bridge to purchase U.S. semiconductor companies has faced delays due to U.S. government scrutiny. Recently, the company's U.S. partner, Ray Bingham, stated that the current "anti-China" sentiment in U.S. policy is hindering the smooth progress of the acquisition.
Overall, semiconductor company acquisition deals are being blocked. Bingham, a partner at Canyon Bridge, mentioned that their acquisition of Lattice Semiconductor is purely for commercial purposes and they have taken steps to address the national security concerns raised by CFIUS. However, despite nine months of communication with the committee, the $1.3 billion deal remains unapproved, with the main obstacle being political considerations.
Since the election, everything related to China has been closely examined and given significant attention, Bingham told The Wall Street Journal. He emphasized that political factors are the sole reason for the transaction's delays. "There’s nothing else," he added.
CFIUS, the U.S. investment review committee comprising multiple agencies, is tasked with assessing potential national security risks in investments in the U.S. Typically, companies avoid discussing CFIUS publicly. Yet, Bingham and his partners are openly addressing these challenges, which highlights their importance.
In the ongoing semiconductor rivalry between the U.S. and China, the Canyon Bridge-Lattice deal serves as a focal point—semiconductors being critical components in computers, mobile phones, and military hardware. CFIUS has intensified its scrutiny of China-related transactions recently.
Last year, Chinese companies’ repeated attempts to acquire U.S. semiconductor manufacturers heightened U.S. government vigilance. Although Canyon Bridge is a U.S.-based private equity firm, its initial major investor was China Venture Capital (CVC), raising concerns among some U.S. congressmen. During the election, Donald Trump labeled China as a "trade predator," worsening the trading environment for China. Recently, CFIUS has stepped up its review of deals involving China.
Led by the U.S. Treasury, the CFIUS Review Committee includes representatives from the Department of Defense, the State Department, the Department of Justice, and the Department of Commerce. A spokesperson for the Treasury Department noted that protecting national security is CFIUS's top priority. Canyon Bridge is now on its third attempt to gain CFIUS approval, with the previous two applications failing during their respective audit periods (approximately two and a half months each).
In a separate interview, Lattice CEO Darin Billerbeck mentioned that both parties committed to enhancing intellectual property protection to prevent IP transfer to China. At their initial meeting with CFIUS, the review team indicated there were no immediate issues, stating, "From the data you provided, it shouldn't be a problem."
The "anti-China" sentiment has led to blockages in Chinese companies' overseas acquisitions. The U.S. has tightened its review of China’s chip acquisition deals since last year. In December, former President Barack Obama blocked a Chinese investment fund from acquiring the German semiconductor equipment supplier Aixtron SE following a CFIUS investigation. Earlier this year, the Obama administration’s advisory team released a report highlighting the economic and military risks posed by China's $150 billion investment over ten years to lead the semiconductor industry, urging policies to maintain U.S. dominance in this sector.
In December, a bipartisan group of 22 House members led by North Carolina Republican Robert Pittenger wrote to CFIUS, expressing concern over Canyon Bridge’s proposed acquisition of Lattice. They questioned whether the deal could provide China with key military technology and whether Canyon Bridge had ties to the Chinese government.
Canyon Bridge Managing Partner Ben Chow stated they disclosed their funding sources to CFIUS from the start. “We’ve never hidden anything,†he said. Additionally, Lattice divested its military design department in 2012, focusing solely on consumer chips for electronics without features suitable for military use.
Lattice CEO Billerbeck remains optimistic about Trump's stance on the deal, believing even if CFIUS objects, Trump could technically approve it. “I know President Trump is a very intelligent businessman,†Billerbeck said. “The Canyon Bridge private equity fund focuses on investing and fostering innovation. A ten-minute explanation of the deal would surely earn his approval.â€
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