White House Blocks Semiconductor Acquisition Over China Security Concerns

The United States government has intervened to halt a planned acquisition in the semiconductor sector, citing national security concerns related to potential Chinese influence. The White House issued a formal directive prohibiting the American photonics company HieFo from acquiring certain business units of defense technology specialist Emcore. The decision follows a comprehensive review by the Committee on Foreign Investment in the United States (CFIUS), which identified potential risks associated with the transaction.

According to the official order, HieFo is required to divest all assets and rights obtained from Emcore within a 180-day period. This measure is designed to prevent any possibility of sensitive technology or intellectual property falling under the control of foreign entities that may pose a threat to U.S. national interests.

The review process disclosed that HieFo is controlled by an individual holding citizenship in the People's Republic of China. This connection raised concerns that the company could engage in activities detrimental to the security of the United States. Authorities emphasized that foreign ownership or influence over critical technology sectors, especially those linked to defense or advanced manufacturing, is subject to stringent oversight under U.S. law.

The transaction in question involved HieFo's acquisition, in 2024, of Emcore's chip manufacturing business, including the production of indium phosphide wafers. The deal was valued at approximately three million U.S. dollars. HieFo's co-founder, Genzao Zhang, is a former vice president at Emcore, further highlighting the complex ties between the two organizations.

National security experts have long expressed apprehension about the transfer of advanced semiconductor technologies to entities with links to China, given the strategic importance of microelectronics in defense and communications. The U.S. government has intensified scrutiny of foreign investments in recent years, particularly in technology sectors where control over intellectual property and manufacturing processes is considered vital for national interests.

CFIUS, the interagency committee responsible for evaluating the impact of foreign investments on U.S. security, conducted a detailed assessment of the Emcore-HieFo transaction. The committee's findings indicated that the acquisition could enable unauthorized access to sensitive technologies or facilitate the transfer of critical manufacturing capabilities outside the United States.

In response to the order, both Emcore and HieFo have thus far declined to issue public statements regarding the blocked sale or the government's concerns. The directive obligates HieFo to unwind the transaction fully and divest all interests related to the Emcore assets by the specified deadline. Failure to comply could result in further legal actions or penalties under federal law.

This move is part of a broader strategy by the U.S. administration to secure the country's semiconductor supply chain and limit foreign access to advanced technological infrastructure. Recent years have seen heightened competition in the global chip industry, with major players and governments seeking to safeguard their technological edge and prevent the outflow of critical know-how to geopolitical rivals.

The White House's action underscores a growing trend of regulatory vigilance over cross-border transactions involving sensitive industries. As the U.S. continues to modernize its approach to economic and security challenges, restrictions on foreign investment in key sectors are expected to remain a central element of national policy.