SAN FRANCISCO—U.S. President Barack Obama’s move to block the sale of a German semiconductor equipment supplier to a Chinese government-backed investment firm is likely to exacerbate growing tensions between the U.S. and China over trade and China's place in the $335 billion global semiconductor industry.
Obama on Friday (Dec. 2) took the extraordinary measure of issuing an executive order prohibiting the acquisition of the U.S. businesses of Aixtron SE by a shell corporation established by China’s Fujian Grand Chip Investment Fund on the grounds that it presents a threat to U.S. national security. Grand Chip is a Chinese investment firm partly owned by China's central government.
Aixtron, which is headquartered in Germany, has a U.S. subsidiary, in Sunnyvale, Calif. The subsidiary, Aixtron Inc., employees about 100 people, representing about 13% of Aixtron’s total employees worldwide. The company derives about 20% of its revenue from customers in the U.S., including Northrup Grumman, a large U.S. military contractor, according to a report by the Bloomberg news service.
A statement issued by the U.S. Treasury Dept. Friday announcing the decision said Obama’s order was made pursuant to U.S. law, which allows the President to prohibit acquisitions of U.S. businesses by foreign persons if he finds that there is credible evidence that the foreign interest exercising control might take action that threatens to impair national security.
“The national security risk posed by the transaction relates, among other things, to the military applications of the overall technical body of knowledge and experience of Aixtron, a producer and innovator of semiconductor manufacturing equipment and technology, and the contribution of Aixtron’s U.S. business to that body of knowledge and experience,” the Treasury Dept. statement read.