Washington: US President Donald Trump has blocked a deal involving American semiconductor assets and a Chinese-linked company, citing national security concerns.
Executive Order Issued
In an executive order issued on Friday, Trump barredc from acquiring certain chip-related assets of Emcore Corporation. The order said there was “credible evidence” that the transaction could threaten the national security of the United States.
HieFo, a Delaware-based company controlled by a Chinese national, had acquired assets tied to digital chips as well as wafer design, fabrication, and processing businesses of New Jersey-based Emcore. The acquisition was completed on April 30, 2024.
Trump said existing legal authorities, outside Section 721 of the Defense Production Act of 1950, did not provide “adequate and appropriate authority” to address the risks posed by the transaction.
Under the order, the transaction is prohibited, and HieFo is barred from holding any interest or rights in the Emcore assets, either directly or indirectly. HieFo and its affiliates have been directed to divest all such interests within 180 calendar days, unless the Committee on Foreign Investment in the United States, or CFIUS, extends the deadline.
Until the divestment is completed and verified by CFIUS, HieFo is prohibited from granting access to the Emcore assets. The restriction also applies to non-public technical information, information technology systems, products, parts, components, books, and records. Any access would require written approval from CFIUS.
The order authorizes CFIUS to impose compliance measures, require certifications, and conduct audits to ensure adherence. HieFo must submit regular written certifications confirming that it is following the order and detailing progress toward divestment.
Emcore had earlier announced the sale of its chips business and indium phosphide wafer fabrication operations for $2.92 million. The transaction also involved HieFo's assumption of certain liabilities and covered substantially all assets tied to Emcore’s discontinued chips business, including facilities in Alhambra, California.
CFIUS is an interagency panel chaired by the US Treasury Department that reviews foreign investments for national security risks. Its scrutiny has expanded in recent years, particularly for deals involving advanced technologies.
Semiconductors are viewed as critical to both civilian and defense applications. US administrations have increasingly used executive authority to restrict foreign access to sensitive chip technologies amid heightened strategic competition with China.
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