In Beijing, Ministry of Commerce spokesman Gao Feng said a media briefing Thursday that China is concerned over the matter and that the U.S. should create a fair and transparent business environment.

“Conducting security checks on a sensitive investment is a nation's legitimate right, but it shouldn't be used as a protectionist tool,” Gao said, adding that the acquisition is a corporate decision that the U.S. should evaluate objectively.

MoneyGram shares fell as much as 4.4% in after-market U.S. trading, while Lattice shares sank as much as 1.7%. Shares of Genworth Financial Inc., which has a $2.7 billion sale to China Oceanwide Holdings Group Co. pending U.S. approval, fell 2.7%.

Canyon Bridge said in a statement it was disappointed with the decision and would stay focused on other investment opportunities. Lattice said in a statement that the acquisition was being terminated after the president's order.

“The transaction with Canyon Bridge was in the best interests of our shareholders, our customers, our employees and the United States,” Lattice CEO Darin G. Billerbeck said in the statement. “We will continue to focus on initiatives that will contribute to Lattice's long-term success.”

Billerbeck came to Washington two weeks ago to make a last-ditch effort to persuade government officials to support the deal. Lattice and Canyon Bridge had proposed measures they said would address U.S. concerns while allowing the deal to proceed, according to that report.

Military Applications

Lattice makes programmable logic chips, which have a wide variety of uses because their attributes can be changed using software. The chips are used in communications, computing, and in industrial and military applications. The company generates more than 70% of its revenue in Asia, according to data compiled by Bloomberg.

Trump's move builds on years of U.S. opposition to China's efforts to bolster its chip industry by buying American technology. China, the world's largest chip market, has been on the hunt for acquisitions in the field as it looks to build a domestic supply and rely less on imports, as the $300 billion global semiconductor industry undergoes its biggest wave of consolidation. U.S. officials worry that China's investment push could threaten the competitiveness of American industry and give Beijing access to cutting-edge technology with commercial and military applications.

The national-security risks posed by the deal included “the Chinese government's role in supporting this transaction, the importance of semiconductor supply chain integrity to the United States government, and the use of Lattice products by the United States government,” the White House said.

Uncommon Lengths

Lattice went to uncommon lengths in hopes of saving its $1.3 billion sale to Canyon Bridge, first announced in November. Acquisitions of U.S. companies like Lattice by overseas buyers are reviewed by the Committee on Foreign Investment in the U.S., a panel staffed by senior officials from the Treasury, State, Homeland Security and Defense departments. CFIUS can bless deals or recommend changes to address security concerns. If it doesn't like a deal, it can recommend the president block it.

But the process rarely gets that far. It's more common for companies to walk away from a transaction once the secretive panel —which doesn't comment publicly on its work —indicates it won't approve it, rather than risk being branded a security threat. While a president in theory could overrule the panel's recommendation, the three previous proposals kicked up to the president since 1990 have been blocked as the panel advised.

In this instance, Lattice and Canyon Bridge refiled three times without winning approval before making the unusual decision to appeal to Trump in hopes of winning him over with a pledge to save jobs.

First Target

Lattice was Canyon Bridge's first acquisition target. The fund's mandate is to make investments in companies in the semiconductor industry mainly in the U.S., according to regulatory filings. Canyon Bridge is investing on behalf of a Chinese venture capital fund sponsored by China Reform Fund Management, a state-owned asset manager.

The proposed acquisition was at least the third Chinese deal that collapsed this year after failing to win approval from the security panel. The others are HNA's investment in Global Eagle Entertainment Inc., an in-flight entertainment and internet services provider, and T.C.L. Industries Holdings' proposed purchase of Inseego Corp.'s mobile-broadband business.

The administration has stepped up pressure on China for months over trade and other matters. Trump said in April that Commerce Department was investigating whether steel imports from China threaten national security. In August, he directed the U.S. trade representative to consider probing China over suspected intellectual property theft.

Bloomberg News