Regarding the Proposed Acquisition of Lattice Semiconductor Corporation by China Venture Capital Fund Corporation Limited

President Trump issued an order under the Defense Production Act blocking the proposed acquisition of U.S. semiconductor company Lattice Semiconductor by a Chinese-backed investment fund, citing credible evidence of potential national security threats. The order prohibits the transaction and requires the parties to fully abandon it within 30 days (extendable by CFIUS to 90 days), with weekly compliance certifications required until termination is complete.

Federal Register Open PDF 82 FR 43665

Impact dates

Date TBD
Weekly compliance certifications to CFIUS
Date TBD
Written certification of termination to CFIUS
Dec 12, 2017
Maximum extension for abandonment (if CFIUS extends)
Oct 13, 2017
Full and permanent abandonment of proposed transaction

Key directives

Prohibit proposed acquisition of Lattice by Purchasers
Prohibit any substantially equivalent transaction
Require full and permanent abandonment within 30 days (CFIUS-extendable to 90 days)
Require written certification of termination to CFIUS
Require weekly compliance certifications with abandonment progress and timeline
Prohibit circumvention transactions
Authorize Attorney General to enforce order
Direct Secretary of Treasury to transmit order to parties

Who is ordered

Timeline

Immediate

Proposed acquisition prohibited
Weekly compliance certifications to CFIUS begin

Near term (90d)

Transaction abandonment deadline (30 days, extendable to 90 days)
Written certification of termination due to CFIUS upon completion

Long term

Precedent for CFIUS review of Chinese investment in U.S. semiconductor/technology sector

Risks & tensions

U.S.-China trade and investment tensions
CFIUS discretion on 30-to-90 day extension creates procedural uncertainty
Potential for legal challenge to enforcement or circumvention claims