The White House also raised concerns over the buyerâs close ties to Beijing. The investment group included China Venture Capital Fund Corporation, which is owned by state-backed entities, the White House said.
The decision could foretell trouble for other Chinese deals under review by the Committee on Foreign Investment in the United States, a multiagency group that examines takeovers of American companies by foreign buyers and makes recommendations to the president. The group, which operates largely in secrecy, is also looking at the proposed purchase of MoneyGram International by Ant Financial, an affiliate of the Chinese technology giant Alibaba Group.
Chinese deal-making in the United States has surged in recent years, as cash-rich companies look overseas to diversify and spread their wealth. Last year, Chinese investment hit $46 billion, a threefold increase from 2015 before, according to the research firm Rhodium Group.
The flow of Chinese money into the country, although it has slowed lately, has prompted concerns over the stateâs influence in corporate strategy. Critics are particularly worried that China is focusing on sensitive industries, like technology. White House officials and lawmakers on both sides of the aisle are pushing for new rules that would keep closer tabs on deals by foreign buyers, by expanding the powers of the foreign investment committee, known as Cfius.
Mr. Trump has sought to take a tough line on Chinaâs trade and investment practices, threatening on the campaign trail to enact sweeping tariffs. Although his moves in office have so far been more modest, he has stoked tensions between the two countries.
In August, the White House began an investigation into claims of Chinese violations of American intellectual property, an inquiry that could result in tariffs or another negotiated outcome. Mr. Trump also called for a report on the steel industry, where China is dominant.
By blocking the deal for Lattice Semiconductor, the president is taking direct aim at Chinaâs industrial policy.
As China looks to expand its global reach and support its economic growth, the government wants to be a dominant force in cutting-edge industries. The countryâs âMade in China 2025â program, which will provide extensive assistance and cheap loans to certain industries, lays out an ambitious plan to build homegrown giants that will compete with American stalwarts.
Semiconductors has been a major focus of the effort. As China moves to build and design chips, Chinese investors has acquired overseas chip makers and teamed up with Western technology giants.
The deal for Lattice Semiconductor played to those ambitions.
The company announced an agreement last November to sell itself to a private equity firm, Canyon Bridge Capital Partners, for $1.3 billion. The initial funding for the firm, based in Palo Alto, Calif., came from China.
Cfius raised warning flags about the deal. Although the review process takes place behind closed doors, Lattice disclosed on Sept. 1 that the committee planned to recommend that the president to block the deal.
When that happens, companies usually drop their acquisition plans. Last year, Philips, the Dutch electronics giant, called off a deal to sell a big stake in its automotive and LED components business over Cfius concerns. The buyer was a consortium with GO Scale Capital, an investment fund sponsored, in part, by GSR Ventures of China.
Lattice instead tried to appeal to the president. In a filing, the company said it would offer measures to resolve any outstanding national security concerns.
The administration was not convinced. Treasury Secretary Steven Mnuchin, the chairman of the review committee, said in a statement on Wednesday that its recommendation on the deal was âconsistent with the administrationâs commitment to take all actions necessary to protect national security.â
âCfius and the president assess that the transaction poses a risk to the national security of the United States that cannot be resolved through mitigation,â Mr. Mnuchin said.