SAN FRANCISCO—U.S. President Barack Obama is poised to act Friday (Dec. 2) to block the acquisition of German semiconductor equipment vendor Aixtron SE by a Chinese investment firm on the grounds of U.S. national security, according to media reports by the Bloomberg news service and others.
On Nov. 18, Aixtron (Herzogenrath, Germany) announced that the Committee on Foreign Investment in the United States (CFIUS) recommended that Obama block its acquisition by a German shell corporation established by China’s Fujian Grand Chip Investment Fund. The recommendation, Aixtron said, was based on CFIUS’s determination that there would be no reasonable way to mitigate U.S. national security risks through proposals submitted by the parties.
Aixtron said at the time that the parties would continue to push through with the acquisition. By law, Obama must decide whether to block a transaction within 15 days after the CFIUS recommendation.
The Bloomberg report, which cites anonymous sources, said Obama would act Friday to block the transaction.
CFIUS is an inter-agency committee of the U.S. government’s executive branch that reviews the national security implications of foreign investment in U.S. companies or operations.
According to the Bloomberg report, CFIUS reviewed the deal because Aixtron has a subsidiary in California and employs about 100 people in the U.S. About 20% of Aixtron’s sales come from the U.S., according to the report. Northrup Grumman, a large U.S. military contractor, is among Aixtron’ customers, according to the report.
If Obama blocks the transaction on national security grounds, it would be the second time he has done so during his presidency, according to the report. In 2012, Obama blocked China-owned Ralls Corp. from developing a wind farm near a U.S. Navy test base in Oregon. Ralls eventually sued Obama and CFIUS over that decision, and the suit was settled last year.
Amid an unprecedented wave of consolidation in the semiconductor industry over the past two years, the U.S. government has increasingly expressed concern over firms with ties to China attempting to buy Western technology firms. In February, Fairchild Semiconductor rejected a $2.6 billion bid from a consortium of Chinese investors citing concern that it would be blocked by the U.S. government. In January, a $3 billion bid from a Chinese consortium to acquire Royal Philips NV’s Lumileds lighting components business was blocked by CFIUS.
Also in February, China-based conglomerate Unisplendour cancelled plans to invest nearly $3.8 billion in Western Digital Corp. after CFIUS said it would investigate the deal.
Currently, some are speculating that a deal by investment firm Canyon Bridge Partners to acquire FPGA vendor Lattice Semiconductor Corp. for $1.3 billion might hit a snag with U.S. government review after the Reuters news service reported earlier this week that Canyon Briddge is funded partly by China’s central government and that the investment firm has links to China’s space program.
—Dylan McGrath covers the semiconductor industry for EE Times.