• An electronic chip held with a pair of tweezers.

An electronic chip held with a pair of tweezers. (Photo : Getty Images)

Lattice Semiconductor Corp, a U.S.-based chip maker, was acquired by Canyon Bridge Capital Partners earlier this month for $1.3 billion. The purchase was funded partly by the central government of China and indirectly links to their space program.

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Lattice manufactures what they call “field programmable gate arrays.” This will allow several companies to embed their own proprietary software on the silicon chips so that it can be used in different ways.

Lattice’s competitors are Xilinx and Intel Corp’s Altera, both of which manufacture chips used in the military.

Canyon Bridge was just recently formed and is funded by their only investor, which is a unit of the China Venture Capital Fund Co. Ltd.

China Venture Capital Fund is a unit under China Reform Holdings, which holds some shares in the China Aerospace Investment Holdings Ltd.

China Aerospace Investment Holdings mainly invests in the China Aerospace Science and Technology Corp, which is responsible in developing as well as launching Chinese spacecraft and strategic weapons.

The ties that are created between China Reform Holdings, China Aerospace Investment Holdings and Lattice open the possibilities to create technology with military applications. This will likely get the attention of U.S. regulators, according to experts from the Committee of Foreign Investments in the United States (CFIUS).

CFIUS is in charge of conducting security reviews with regard to proposed company acquisitions by foreign parties. They have yet to sign the agreement regarding Lattice's acquisition.

Cleary Gottlieb, an attorney that specializes in actions related to CFIUS, said: “It doesn’t mean they won’t get cleared, but they will get a harder look from CFIUS if the acquiring company is state-backed than if it was a private-backed company.”

Canyon Bridge, Lattice and China Reform Holdings declined to give any comments on the said story.

Jones Day, legal adviser of Canyon Bridge, said that they have “limited partners with funding coming predominately from the China Reform Fund,” but didn’t elaborate on the details.