President Trump has blocked an investment firm owned by the Chinese government from acquiring Lattice Semiconductor, a maker of field-programmable gate arrays and other programmable logic devices. The decision follows a recommendation by the Committee on Foreign Investment in the United States (CFIUS), a US government body that reviews deals for potential national security problems.

Chinese investors have been plowing money into American technology companies in recent years, and this has raised concerns that Chinese control could undermine American national security. That could happen because Chinese firms gain the knowhow to develop high-end technologies with military applications. Or deals could pose a more direct threat if they enable the Chinese government to infiltrate the supply chain for products purchased by the US government—thereby creating opportunities for surveillance or sabotage.

Lattice, a Portland-based company with around 1,000 employees, argued that the Trump administration had nothing to worry about. Lattice said it outsourced chip manufacturing to other companies, so there wasn't a risk of manufacturing facilities being infiltrated. Lattice also offered to transfer key intellectual property to the US government to ensure that it didn't fall into Chinese hands.

But the Trump administration decided these steps were not sufficient to protect national security. In a statement released after Trump's decision, the Treasury Department raised concerns about "the potential transfer of intellectual property to the foreign acquirer, the Chinese government's role in supporting this transaction, the importance of semiconductor supply chain integrity to the US government, and the use of Lattice products by the US government."

Trump's decision was not a surprise—especially given Trump's reputation as a China hardliner. While the president has ultimate authority over whether to block transactions on national security grounds, presidents routinely follow the recommendations of the CFIUS panel, which is chaired by the president's Treasury secretary.