February 27, 2016 / 12:21 AM / 4 years ago

Exclusive: Lattice Semiconductor explores sale amid Chinese interest - sources

(Reuters) - Lattice Semiconductor Corp (LSCC.O), a U.S. maker of programmable chips in mobile phones and tablets, is exploring a sale that has attracted interest from a prospective Chinese buyer, according to people familiar with the matter.

The sale process could be a further test of corporate China’s ability to snap up U.S. chip makers, after attempted deals by Unisplendour Corp Ltd (000938.SZ) and China Resources Microelectronics Ltd were dropped this month on concerns the United States could block them on national security grounds.

Lattice Semiconductor’s sale discussions are also another example of the wave of dealmaking sweeping the industry, fueled by a drive by major consumers of chips, such as Apple Inc (AAPL.O) and Samsung Electronics Co (005930.KS), to cut costs.

Lattice Semiconductor is working with investment bank Morgan Stanley (MS.N) to review interest from potential buyers, including a Chinese party, the people said on Friday. There is no certainty Lattice Semiconductor will agree to any deal, the people added.

The Chinese party’s identity could not be immediately established. The sources asked not to be identified because the sale process is confidential. Lattice Semiconductor and Morgan Stanley offered no immediate comment.

Based in Portland, Oregon, Lattice Semiconductor makes programmable logic chips and related software used in everything from smartphones to cars. It has a market capitalization of about $678 million.

Earlier this week, Unisplendour scrapped its planned $3.78 billion investment in U.S. hard-disk maker Western Digital Corp (WDC.O) after the U.S. Committee on Foreign Investment (CFIUS) decided to review the transaction.

A Chinese consortium that included China Resources Microelectronics also lost a $2.5 billion bid to acquire Fairchild Semiconductor FCS.O earlier this month. Fairchild cited the risk of CFIUS blocking that deal for its decision.

Lattice Semiconductor has been working to integrate Silicon Image, a U.S. company it bought for $600 million in its biggest-ever deal last year, which expanded its products for video customers.

Lattice Semiconductor Chief Executive Darin Billerbeck said on an earnings conference call earlier this month that he expects the first quarter “to represent a low point” of the year for the company.

Lattice Semiconductor blamed its weak quarterly revenue on Samsung, one of its biggest customers, and its peers struggling with profitability and cheaper phone models.

Reporting by Liana B. Baker and Greg Roumeliotis in New York; Editing by Cynthia Osterman

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