Obama blocks Chinese company's takeover of Aixtron's U.S. business

[TaiShang]

| Mon Dec 5, 2016 | 9:28pm EST | Reuters
Lawmakers ask U.S. to block Chinese takeover of Lattice Semiconductor

By Greg Roumeliotis | WASHINGTON

More than 20 U.S. Congress members wrote to U.S. Treasury Secretary Jack Lew on Monday asking for the acquisition of U.S. chip maker Lattice Semiconductor Corp (LSCC.O) by a fund with ties to China's government to be blocked over security concerns.

The letter follows a Reuters report last week that revealed that Canyon Bridge Capital Partners, the buyout fund that agreed to acquire Lattice for $1.3 billion, is funded partly by cash originating from China's central government and has indirect links to its space program.

In their letter, the 22 lawmakers wrote that the deal could disrupt the U.S. military supply chain and possibly lead to a reliance on foreign-sourced technologies for many critical U.S. Defense Department programs.

They also pointed to a warning last month by U.S. Secretary of Commerce Penny Pritzker that the United Stated will not accept China's "$150 billion industrial policy designed to appropriate this industry."

"Anything other than a rejection of the acquisition of Lattice by this People's Republic of China-front entity would seem to undermine Secretary Pritzker's public commitment," the lawmakers' letter stated.

The members of Congress, Republican and Democrat, wrote to Lew in his capacity as chairman of the Committee on Foreign Investment in the United States (CFIUS), a government panel that scrutinizes the acquisitions of companies by foreign firms on national security grounds.

Representatives for CFIUS and Canyon Bridge did not immediately respond to requests for comment. Lattice declined to comment.

Portland, Oregon-based Lattice makes programmable chips known as "field programmable gate arrays" that allow companies to put their own software on silicon chips for different uses. It does not sell chips to the U.S. military, but its two biggest rivals - Xilinx Inc (XLNX.O) and Intel Corp’s (INTC.O) Altera - make chips that are used in military technology.

China has been working to develop its space program for military, commercial and scientific purposes. As a result, the United States has been wary of China's motives in semiconductor deals, and this skepticism is expected to grow after U.S. President-elect Donald Trump, which has already taunted China on issues ranging from trade to relations with Taiwan, is inaugurated next month.

In their letter, the lawmakers called on CFIUS to act as decisively as it did in the case of German semiconductor equipment maker Aixtron SE (AIXGn.DE). Last week, U.S. President Barack Obama upheld a recommendation by CFIUS to block Aixtron's 670 million euro ($717 million) sale to Fujian Grand Chip Investment Fund over national security concerns.


(Reporting by Greg Roumeliotis in Washington; Additional reporting by Liana B. Baker and Diane Bartz in Washington; Editing by Lisa Shumaker)


********

Ho ho ho! The US legislators want to block another one.
When you are deep in debt and need cash, other than selling what other options do you have?

.

Looks more like desperation than strategy. It is like sealing the luxury rooms for security in a sinking Titanic. Titanic is bound to sink.

 

[terranMarine]

Trump not only wants to build a wall to keep the Mexicans out, the US politicians also want to build a wall surrounding troubled companies from Chinese take over in the name of national security is at stake. I guess they rather see those companies go bankrupt or more people being laid off. It looks like isolation and protectionism is the main strategy to make America great again.

 

[Huan]

Can China still make their own programmable silicon chips? Is the acquisition of Lattic's technology that vital for China?

 

[Shotgunner51]

Can China still make their own programmable silicon chips? Is the acquisition of Lattic's technology that vital for China?

Yes. People do M&A for two purposes, either (1) further strengthen oneself , or (2) further weaken/threaten opponent.

A lot of hostile M&A belong to the latter.

deal could disrupt the U.S. military supply chain and possibly lead to a reliance on foreign-sourced technologies for many critical U.S. Defense Department programs.

Spotted. Next, let's fire a lawsuite.

 

[Hamartia Antidote]

http://www.wsj.com/articles/chinese-takeover-of-aixtron-collapses-after-u-s-ban-1481203244

Chinese Takeover of Aixtron Collapses After U.S. Ban
The contentious €670 million offer for the semiconductor company was blocked by President Obama on national security grounds

FRANKFURT—A Chinese takeover bid for Germany’s Aixtron SE collapsed Thursday, a week after President Barack Obama blocked the deal on national security grounds, according to a statement from the buyer.

The contentious €670 million ($723 million) offer for the semiconductor company was thrown into question this fall when Germany’s economic ministryraised security concerns about the bid, made by Fujian Grand Chip Investment Fund LP’s German unit. These concerns were echoed by authorities in the U.S., resulting in last week’s outright ban on the acquisition by President Obama.

Grand Chip on Thursday said the deal failed due to the U.S. ban. In recent days there had been speculation that the deal could go through if Aixtron were to divest its U.S. operations.

Under U.S. law, U.S. officials were able to block the takeover of Aixtron’s U.S. subsidiary Aixtron Inc. A statement from Grand Chip said that this block meant the takeover offer wasn’t fulfilled and caused the deal to collapse.

The deal failure highlights escalating tension between Beijing and Western governments about Chinese purchases of Western technology assets and follows a warning Tuesday from U.S. lawmakers about a proposed Chinese takeover of an U.S. semiconductor manufacturer.

Twenty-two House lawmaker lawmakers on Tuesday wrote to Treasury Secretary Jacob Lew raising concerns about the proposed purchase of Lattice Semiconductor Corp. by Canyon Bridge Capital Partners Inc., a new private-equity firm backed by investors in China.

The lawmakers warned Mr. Lew that Canyon Bridge appeared to be directly affiliated with the government of the People’s Republic of China, according to a letter seen by the The Wall Street Journal. Security analysts raised similar concerns about Fujian Grand Chip Investment Fund’s ownership structure, although China insists both takeovers are normal investment activities.

Security analysts have warned China is attempting to acquire sensitive Western semiconductor technology as pioneered by Aixtron and Lattice. People familiar with the work of CFIUS believe a semiconductor technology based on gallium nitride, or GaN, could have been the focus of security concerns in the Aixtron deal.

A spokeswoman for Germany’s economy ministry said the removal of the offer by Grand Chip meant Berlin would no longer continue to review the case.

Germany has been the top European destination for Chinese M&A activity in 2016. Chinese companies have acquired German companies at the rate of about one a week since January, according to data provider Dealogic. Chinese companies have spent more than $11 billion on German companies this year, eclipsing the previous record of $2.6 billion in 2014.

 

[TaiShang]

http://www.wsj.com/articles/chinese-takeover-of-aixtron-collapses-after-u-s-ban-1481203244

Chinese Takeover of Aixtron Collapses After U.S. Ban
The contentious €670 million offer for the semiconductor company was blocked by President Obama on national security grounds

FRANKFURT—A Chinese takeover bid for Germany’s Aixtron SE collapsed Thursday, a week after President Barack Obama blocked the deal on national security grounds, according to a statement from the buyer.

The contentious €670 million ($723 million) offer for the semiconductor company was thrown into question this fall when Germany’s economic ministryraised security concerns about the bid, made by Fujian Grand Chip Investment Fund LP’s German unit. These concerns were echoed by authorities in the U.S., resulting in last week’s outright ban on the acquisition by President Obama.

Grand Chip on Thursday said the deal failed due to the U.S. ban. In recent days there had been speculation that the deal could go through if Aixtron were to divest its U.S. operations.

Under U.S. law, U.S. officials were able to block the takeover of Aixtron’s U.S. subsidiary Aixtron Inc. A statement from Grand Chip said that this block meant the takeover offer wasn’t fulfilled and caused the deal to collapse.

The deal failure highlights escalating tension between Beijing and Western governments about Chinese purchases of Western technology assets and follows a warning Tuesday from U.S. lawmakers about a proposed Chinese takeover of an U.S. semiconductor manufacturer.

Twenty-two House lawmaker lawmakers on Tuesday wrote to Treasury Secretary Jacob Lew raising concerns about the proposed purchase of Lattice Semiconductor Corp. by Canyon Bridge Capital Partners Inc., a new private-equity firm backed by investors in China.

The lawmakers warned Mr. Lew that Canyon Bridge appeared to be directly affiliated with the government of the People’s Republic of China, according to a letter seen by the The Wall Street Journal. Security analysts raised similar concerns about Fujian Grand Chip Investment Fund’s ownership structure, although China insists both takeovers are normal investment activities.

Security analysts have warned China is attempting to acquire sensitive Western semiconductor technology as pioneered by Aixtron and Lattice. People familiar with the work of CFIUS believe a semiconductor technology based on gallium nitride, or GaN, could have been the focus of security concerns in the Aixtron deal.

A spokeswoman for Germany’s economy ministry said the removal of the offer by Grand Chip meant Berlin would no longer continue to review the case.

Germany has been the top European destination for Chinese M&A activity in 2016. Chinese companies have acquired German companies at the rate of about one a week since January, according to data provider Dealogic. Chinese companies have spent more than $11 billion on German companies this year, eclipsing the previous record of $2.6 billion in 2014.

Interesting emphasis on 'western' technology.

Not necessarily bad, only makes me think whether those of us in East Asia will have such industrial-civilizational identity?

US is fast establishing a NATO regime of trade relations.

 

[TaiShang]

Chinese company withdraws takeover bid of German chip equipment maker
(Xinhua) December 09, 2016

[File photo]

China's Fujian Grand Chip Investment Fund (FGC) announced on Thursday on its website to withdraw its offer for German chip equipment maker Aixtron.

FGC said in the announcement that the takeover offer has lapsed. Meanwhile, already acquired papers would be expected to be re-booked on December 13.

Aixtron's CEO Martin Goetzeler told the German newspaper Handelsblatt that he is disappointed and now authority agencies are needed in the interest of security and jobs.

Goetzeler added that Aixtron would be threatened to face hard cuts and losses of jobs without the sale.

"We have noted that the bidder has withdrawn his offer to take over Aixtron," a spokesman for the Germany Federal Ministry for Economic Affairs and Energy (BMWi) was quoted as saying by German media.

This means that the examination of the federal government for the issue of a clearance certificate is no longer necessary, the spokesman added.

In October, BMWi suddenly withdrew the clearance certificate for FGC. The ministry then reopened the review of the 670-million-euro (715-million-U.S. dollar) deal after it was initially approved on Sept. 8.

Last week, U.S. President Barack Obama blocked FGC's purchase of Aixtron's U.S. business despite objections from China.

@Götterdämmerung

 

[Bussard Ramjet]

Interesting emphasis on 'western' technology.

Not necessarily bad, only makes me think whether those of us in East Asia will have such industrial-civilizational identity?

US is fast establishing a NATO regime of trade relations.

The west will at the end of the day always stick together.

That's why China needs to be stronger than the west combined like it was in previous days.

China is not any a nation like US, it is a civilizational state, akin to the whole west.

But it seems to me that China is simply content by competing with the US, when its eyes should be on the west combined.

 

[shadows888]

The west will at the end of the day always stick together.

That's why China needs to be stronger than the west combined like it was in previous days.

China is not any a nation like US, it is a civilizational state, akin to the whole west.

But it seems to me that China is simply content by competing with the US, when its eyes should be on the west combined.

China + India market = the west can fck off. sadly they will most likely play both sides off. my hope is on the SCO (w/ new members in 2017) solving the border issues then the animosity will subside drastically.

 

[shadows888]

Can China still make their own programmable silicon chips? Is the acquisition of Lattic's technology that vital for China?

not vital, just speed up potential developments by a few months. and chance that your not wasting time by doing the R&D for the second time when those companies are selling for so cheap (compared to the amount of capital china has). See Intel chip ban the USA did a while back. it did delay china's supercomputer development by 8 months but end up giving china the incentive to develop homegrown processor chips that are just as good. But again, it took an extra 8 months to achieve the same result.

 

[TaiShang]

The west will at the end of the day always stick together.

That's why China needs to be stronger than the west combined like it was in previous days.

China is not any a nation like US, it is a civilizational state, akin to the whole west.

But it seems to me that China is simply content by competing with the US, when its eyes should be on the west combined.

Nonetheless China is a nation state and is located in a region. To me the nearest periphery is Northeast Asia. The larger one is East Asia (NEA+SEA). It is quite difficult to develop a industrial region identity in East Asia. But a regional identity in NEA can be constructed.

Then, when needed, the NEA region can securitize trade when their interests are challenged.

This whole idea of mine rests on how the US side emphasizes the "Western-ness" of technology. It is not "German" technology (Aixtron), it is a "Western" technology.

That's quite striking to me. I understand EU as a community having such a concern. But I did not know the "West" was actually a community.

 

[Bussard Ramjet]

Nonetheless China is a nation state and is located in a region. To me the nearest periphery is Northeast Asia. The larger one is East Asia (NEA+SEA). It is quite difficult to develop a industrial region identity in East Asia. But a regional identity in NEA can be constructed.

Then, when needed, the NEA region can securitize trade when their interests are challenged.

This whole idea of mine rests on how the US side emphasizes the "Western-ness" of technology. It is not "German" technology (Aixtron), it is a "Western" technology.

That's quite striking to me. I understand EU as a community having such a concern. But I did not know the "West" was actually a community.

How can you not know that West was a community?

Rather, it is the best aligned community in the world. It is aligned militarily (NATO and other defence treaties), culturally, politically, ideologically, and in terms of trade.

Such corresponding alignment doesn't exist anywhere. For example, in East Asia, Japan, and Vietnam are openly hostile to China. While, other countries like South Korea, Singapore, etc. are in US camp.

That's why I repeat here. That China, due to unique circumstances, has to surpass the west. Not just the US.

 

[Götterdämmerung]

Chinese company withdraws takeover bid of German chip equipment maker
(Xinhua) December 09, 2016

[File photo]

China's Fujian Grand Chip Investment Fund (FGC) announced on Thursday on its website to withdraw its offer for German chip equipment maker Aixtron.

FGC said in the announcement that the takeover offer has lapsed. Meanwhile, already acquired papers would be expected to be re-booked on December 13.

Aixtron's CEO Martin Goetzeler told the German newspaper Handelsblatt that he is disappointed and now authority agencies are needed in the interest of security and jobs.

Goetzeler added that Aixtron would be threatened to face hard cuts and losses of jobs without the sale.

"We have noted that the bidder has withdrawn his offer to take over Aixtron," a spokesman for the Germany Federal Ministry for Economic Affairs and Energy (BMWi) was quoted as saying by German media.

This means that the examination of the federal government for the issue of a clearance certificate is no longer necessary, the spokesman added.

In October, BMWi suddenly withdrew the clearance certificate for FGC. The ministry then reopened the review of the 670-million-euro (715-million-U.S. dollar) deal after it was initially approved on Sept. 8.

Last week, U.S. President Barack Obama blocked FGC's purchase of Aixtron's U.S. business despite objections from China.

@Götterdämmerung

It's our prerogative to say no to any deals that would put our economy or security in danger. What irks me is rather that the Merkel regime has been unable to act independently but lets a foreign government making the decision for us. That's the sentiment most Germans have with regard to this affaire.

 

[TaiShang]

How can you not know that West was a community?

Rather, it is the best aligned community in the world. It is aligned militarily (NATO and other defence treaties), culturally, politically, ideologically, and in terms of trade.

Such corresponding alignment doesn't exist anywhere. For example, in East Asia, Japan, and Vietnam are openly hostile to China. While, other countries like South Korea, Singapore, etc. are in US camp.

That's why I repeat here. That China, due to unique circumstances, has to surpass the west. Not just the US.

Well, that's a tall order. A combined West (US+EU) means about $40 trillion, which is half of the global GDP. Their unnoticed strength in industry, education and other fields add to this combined power even more.

The shortcut to achieving a certain parity (of there is really such a unified West in every sense) would be a unified Northeast Asia, which makes about $20 trillion GDP combined and superior industrial and logistical capabilities.

Vietnam and Japan are the Confucius sphere. They are not enemy. There is a feud, but it is more of like a family feud. Like at family feud, it may go quite violent and historical memory lasts longer than it would between two complete strangers.

We probably cannot easily forget because we have been so close and so alike.

It's our prerogative to say no to any deals that would put our economy or security in danger. What irks me is rather that the Merkel regime has been unable to act independently but lets a foreign government making the decision for us. That's the sentiment most Germans have with regard to this affaire.

What was Germany's reaction to the deal before US got involved?

 

[Viet]

How can you not know that West was a community?

Rather, it is the best aligned community in the world. It is aligned militarily (NATO and other defence treaties), culturally, politically, ideologically, and in terms of trade.

Such corresponding alignment doesn't exist anywhere. For example, in East Asia, Japan, and Vietnam are openly hostile to China. While, other countries like South Korea, Singapore, etc. are in US camp.

That's why I repeat here. That China, due to unique circumstances, has to surpass the west. Not just the US.

you are right. the West is more close to each other than anywhere else despite centuries of confrontations. I can´t speak for Japan as it is a special case. as for VN, we could be the best friend and military ally ever of China due to our close cultural similarities, but unfortunately, yes we are hostile to the Chinese because they rather want to see a Pakistan-like country in the south. instead of Vietnam. in our eyes China is a hopeless case.