Deals

Tim Culpan is a technology columnist for Bloomberg Gadfly. He previously covered technology for Bloomberg News.

So now we know: Chips are off the table.

Perhaps they were never back on the table, despite the notion that eight years of President Barack Obama holding back a tide of Chinese acquisitions of U.S. semiconductor manufacturers would be brought to an end by Donald Trump.

Canyon Bridge Capital Partners LLC, backed by a Chinese state-owned asset manager, tried and failed three times to persuade the influential Committee on Foreign Investment in the U.S. to let it buy Lattice Semiconductor Corp. It had one more (trump) card to play, as the president himself can approve or refuse a deal.

In the event, even the prospect of a tweetable moment on saving American jobs failed to sway matters in Canyon's favor. Treasury Secretary Steven Mnuchin delivered the news in a statement:

Consistent with the administration’s commitment to take all actions necessary to ensure the protection of U.S. national security, the president issued an order prohibiting the acquisition.

If we assume that former White House chief strategist Stephen Bannon did, and does, channel Trump's thinking, then a hint of the rejection came earlier in the week. Addressing a conference in Hong Kong, Bannon inveighed against what he called the "forced technology transfer" required of U.S. companies hoping to do business in China.

The line in the sand is drawn, and we're likely to see very few Chinese attempts to acquire U.S. semiconductor companies as long as Trump is president.

Needing a Savior
Lattice's chronic losses make finding a buyer a pressing concern
Source: Bloomberg

Unfortunately, this doesn't give us much clarity on other deals in the works. Take Ant Financial's proposed purchase of MoneyGram International Inc. Shares of the U.S. payment-services provider dropped as much as 17 percent in post-market action. That's a logical, if knee-jerk, reaction.

Working in Ant's favor is the golden handshake its controlling shareholder, Jack Ma, shared with Donald Trump when the latter was president-elect. Ma has promised to create millions of American jobs through Alibaba Group Holding Ltd., a nice soundbite for @realdonaldtrump. And while there was no explicit quid pro quo, Trump may have a little more difficulty saying no to Ma if the MoneyGram deal crosses his desk.

Compared with semiconductors, there's not a lot of technology to protect in a Chinese company buying a wire-transfer provider. However, (and Ant and MoneyGram might hate us for saying this), the bigger risk may come from this summer's hack of Equifax Inc., which collects and collates personal credit information.

Hopeful
MoneyGram shares rose over the past year in anticipation of an Ant Financial takeover, or at least a bidding war. They were unscathed by the Equifax scandal
Source: Bloomberg

A main point of opposition to the Ant-MoneyGram deal is that reams of customer information would come into Chinese hands. The breach of data from 143 million Americans, and the sale of Equifax stock by executives before the breach was publicized, has 36 U.S. senators baying for blood, not to mention regulatory authorities and lawyers. The case reminded everyone how personally and politically sensitive customer data is in the U.S.

Unrelated as it might be, the Equifax scandal makes this an inopportune time for a Chinese businessman to seek permission to buy a U.S. company with access to personal financial data. Investors will be waiting to learn if Trump also sees it that way.

-- Brooke Sutherland contributed to this column.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

To contact the author of this story:
Tim Culpan in Taipei at tculpan1@bloomberg.net

To contact the editor responsible for this story:
Paul Sillitoe at psillitoe@bloomberg.net