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US blocks Chinese purchase of Aixtron over security concerns

US blocks Chinese purchase of Aixtron over security concerns

By BizLED Bureau

Dec 6, 2016: US President Barack Obama blocks a Chinese company Grand Chip Investment’s purchase of German semiconductor equipment maker Aixtron, and rejected the inclusion of Aixtron’s US business in the deal. White House was able to nullify the deal.

The US Treasury Department said the Committee on Foreign Investment in the United States (CFIUS) chaired by Obama reviewed the deal, and found the risks posed by the deal, which could place sensitive technology with potential military applications in Chinese hands. They found that the deal poses a risk to the national security of the US, that cannot be resolved through mitigation.

Also Read: Toyoda Gosei buys Aixtron Showerhead system to make blue & UV LEDs

According to the Treasury, there is “credible evidence that the foreign interest exercising control might take action that threatens to impair national security,” through the sale, as military technology is involved.

Aixtron’s expertise in technology is key in making advanced compound semiconductors used for LED lighting, lasers and solar cells, which has military applications.

The US does not want to see any such crucial technology end up in the hands of the Chinese government-backed Grand Chip Investment, which wants to buy Aixtron.

The Treasury said Aixtron’s is an important contributor to that technology in US.

Germant to reopen review

In October 2016, the German government was forced to withdrew its approval for the $714 million (670 million euro) takeover as Washington raised security concerns. US had also expressed fears that China could use Aixtron technology to bolster its nuclear program. The German economy ministry will also reopen its review of the deal.

Chinese threat

The US Treasury pointed out that Grand Chip, a German company, is actually owned by investors in China, some of whom have Chinese government ownership. The deal would be financed by a unit of China IC Industry Investment Fund, a Chinese government-supported investment fund. However, Chinese Foreign Ministry spokesman Geng Shuang said that this is sheer interference and warned against it, reports AFP. “This acquisition is a normal business activity,” he said.

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