President Barack Obama has issued a Presidential Order blocking Chinese Fujian Grand Chip Investment Fund and any of its subsidiaries from acquiring German semiconductor deposition firm Aixtron. The Presidential Order, issued on Dec. 2, says that the deal “threatens to impair the national security of the United States.”
According to Bloomberg, this is only the third time in more than a quarter-century that the White House has rejected an overseas buyer as a national security risk. The block was ordered following the advice of the Committee on Foreign Investment in the U.S., an inter-agency committee chaired by the Secretary of the Treasury.
Aixtron makes devices which produce crystalline layers based on gallium nitride — these are used as semiconductors in weapons systems. This technology is being utilized to upgrade both U.S. and foreign-owned Patriot missile defense systems. There is concern about China being able to access IP and other information associated with the production of compound semiconductors, in particular the GaN devices used in LEDs, military radars, antennas, power semiconductors, and lasers.
However, the sale of Aixtron could still proceed under new terms, if Aixtron sells its Silicon Valley division separately to get around U.S. objections. Aixtron says that the Presidential Order “was limited to the United States business and did not prohibit the acquisition of Aixtron shares.”
The deal is valued at approximately $715 million.
The U.S. also blocked the sale of Philips’ lighting business, Lumileds, to a group of Chinese investors several months ago. However, a reason wasn’t given. LumiLEDs does not manufacture any defense-related products.