Obama bars China's Fujian from buying Aixtron's U.S. business

Fri Dec 2, 2016 6:32pm EST
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By Matthias Inverardi and Diane Bartz

FRANKFURT/WASHINGTON (Reuters) - President Barack Obama blocked a Chinese investment fund from acquiring the U.S. business of German semiconductor equipment maker Aixtron (AIXGn.DE: Quote) because the deal posed a risk to American national security, the Treasury Department said on Friday.

Obama's executive order barring China's Fujian Grand Chip Investment Fund (FGC) from completing the acquisition of a German company with American assets was one of few such instances in which a U.S. president has blocked a transaction due to national security concerns.

His action appeared to be based on concerns about China gaining access to the secrets of producing a material called gallium nitride used in military equipment.

In 2012, Obama ordered Ralls Corp, owned by China's Sany Group, to sell its interest in wind farms near sensitive U.S. naval installations in Oregon.

An Aixtron spokesman said the FGC deal would be called off if Obama took such action. Aixtron has said scrapping the proposed deal would mean it would have to take action to balance income and costs, including potential job cuts.

The Treasury Department said Obama was blocking the deal following an assessment by the Committee on Foreign Investment in the United States (CFIUS), an inter-agency task force that the department leads.

"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," the department said.

Gallium nitride, a powdery yellow compound used in light-emitting diodes (LED), radar, antennas and lasers, is grown using Aixtron-manufactured technology, which has in the past been sold to U.S. military equipment maker Northrop Grumman (NOC.N: Quote).   Continued...

The headquarters of German chip equipment maker Aixtron SE is pictured through a security fence in Herzogenrath near the western German city of Aachen, October 25, 2016.  REUTERS/Wolfgang Rattay