US moves to block Chi­nese pur­chase of Ger­man tech firm Aixtron

Kuwait Times - - TECHNOLOGY -

US Pres­i­dent Barack Obama on Fri­day moved to block a Chi­nese com­pany’s pur­chase of Ger­man semi­con­duc­tor equip­ment maker Aixtron by re­ject­ing the in­clu­sion of Aixtron’s US busi­ness in the deal.

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

It said pub­licly traded Aixtron SE’s ex­per­tise in tech­nol­ogy key to mak­ing ad­vanced com­pound semi­con­duc­tors used for LED light­ing, lasers and so­lar cells also has mil­i­tary ap­pli­ca­tions. Wash­ing­ton does not want to see such tech­nol­ogy end up in the hands of the Chi­nese gov­ern­ment-backed com­pany which wants to buy Aixtron, Grand Chip In­vest­ment.

The Trea­sury said Aixtron’s US busi­ness is an im­por­tant con­trib­u­tor to that tech­nol­ogy. In late Oc­to­ber, the Ger­man gov­ern­ment with­drew its ini­tial ap­proval for the 670 mil­lion euro ($714 mil­lion) takeover af­ter Wash­ing­ton raised se­cu­rity con­cerns. Cit­ing Ger­man in­tel­li­gence sources, Han­dels­blatt daily re­ported that the United States had ex­pressed fears that China could use Aixtron tech­nol­ogy to bol­ster its nu­clear pro­gram. Af­ter re­ceiv­ing the in­for­ma­tion, the Ger­man econ­omy min­istry said on Oc­to­ber 24 that it would re­open its re­view of the deal.

Chi­nese gov­ern­ment role cited

The US Trea­sury said Fri­day that Grand Chip is a Ger­man com­pany ex­pressly set up for the deal and is “ul­ti­mately owned by in­vestors in China, some of whom have Chi­nese gov­ern­ment own­er­ship.” It added that the deal would be fi­nanced by a unit of China IC In­dus­try In­vest­ment Fund, a Chi­nese gov­ern­ment-sup­ported in­dus­trial in­vest­ment fund de­signed to sup­port the coun­try’s in­te­grated cir­cuit in­dus­try.

The Trea­sury state­ment did not say what mil­i­tary ap­pli­ca­tion of the Ger­man com­pany’s tech­nol­ogy had con­cerned US of­fi­cials. Aixtron’s spe­cialty is a tech­nol­ogy for de­posit­ing thin lay­ers of atoms on semi­con­duc­tor wafers that are used in elec­tronic de­vices and sys­tems that pro­duce, con­trol and con­vert light. It is pop­u­larly used in mak­ing so­lar cells.

Chi­nese For­eign Min­istry spokesman Geng Shuang warned against in­ter­fer­ence, in com­ments to AFP. “This ac­qui­si­tion you men­tioned is a nor­mal busi­ness ac­tiv­ity,” he said. “Since it’s a nor­mal com­mer­cial ac­qui­si­tion, it should fol­low the nor­mal prin­ci­ples and the rules of the mar­ket. We hope that there will not be an ex­ces­sive politi­cal in­ter­pre­ta­tion on this ac­qui­si­tion or politi­cal in­ter­fer­ence in it.”

There was no im­me­di­ate re­ac­tion from Aixtron or Grand Chip. In a Novem­ber 21 US se­cu­ri­ties fil­ing, the two said they were await­ing the US pres­i­den­tial re­view and that they “plan to con­tinue to ac­tively en­gage in fur­ther dis­cus­sions to ex­plore means of re­solv­ing the US na­tional se­cu­rity con­cerns iden­ti­fied by CFIUS.”

If the US re­jected the deal, they said there were no as­sur­ances that they would be able to pro­ceed with the trans­ac­tion. CFIUS re­views for­eign in­vest­ments in US com­pa­nies, and has both ap­proved and turned down a num­ber of Chi­nese takeovers in re­cent years.

In 2005 it blocked China Na­tional Off­shore Oil Cor­po­ra­tion’s bid for Uno­cal, and in 2008 elec­tron­ics gi­ant Huawei dropped its of­fer for US com­mu­ni­ca­tions com­pany 3Com be­fore an ex­pected re­jec­tion by the com­mit­tee. In 2014 it ap­proved Len­ovo’s pur­chase of IBM’s com­puter server unit, but early this year its con­cerns led to Dutch elec­tron­ics gi­ant Philips drop­ping a planned $2.8-bil­lion ma­jor­ity share sale of its Lu­mileds light­ing unit to Bei­jing-based GO Scale Cap­i­tal.

Also early this year Chi­nese tech firm Unis­plen­dour Corp dropped its $3.8 bil­lion of­fer for 15 per­cent of US hard disk maker Western Dig­i­tal be­fore a CFIUS re­view. But in Au­gust the com­mit­tee gave its OK for state-owned China Na­tional Chem­i­cal Corp’s $43 bil­lion takeover of Swiss pes­ti­cide and seed gi­ant Syn­genta.

The Trea­sury state­ment Fri­day said the CFIUS panel was not op­posed to for­eign in­vest­ment and was only fo­cused on na­tional se­cu­rity is­sues. “The pres­i­dent’s de­ci­sion is spe­cific to this trans­ac­tion and is not a de­ter­mi­na­tion with re­gard to any other for­eign di­rect in­vest­ment from China or any other coun­try,” it said.

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