According to the NY Times, apparently the US government killed the Lumileds deal over potential military applications of gallium nitride (GaN), one of the key ingredients in LED technology.
At the center of the committee’s concerns on the Philips deal, according to Mr. Lewis, was a little known but increasingly important advanced semiconductor material called gallium nitride. Though not a household name like silicon, gallium nitride, often referred to by its abbreviation GaN, could be used to construct a new generation of powerful and versatile microchips.
It has been used for decades in the low-energy light sources known as light-emitting diodes, and it features in technology as mundane as Blu-ray Disc players. But its resistance to heat and radiation give it a number of military and space applications. Gallium nitride chips are being used in radar for antiballistic missiles and in an Air Force radar system, called Space Fence, that is used to track space debris.