6 December 2016

Obama Administration Moves to Block Chinese Acquisition of a German Chip Maker

Paul Mozur

HONG KONG — President Obama on Friday moved to block a Chinese deal to buy a high-tech company on national security grounds, an unusual step that could set the stage for greater tensions between his successor, Donald J. Trump, and a Chinese government determined to bolster its technological capabilities.

The intervention in a Chinese company’s bid to buy a German semiconductor company, Aixtron, comes after Chinese companies have spent billions to acquire technology in Europe and the United States. American officials have increasingly moved to stop such deals, but Chinese companies have shown growing adeptness in getting around those restrictions to strike up relationships that could someday lead to greater access to technology.

A statement from the Treasury Department said the administration blocked the purchase of the American portion of Aixtron’s business because it posed a national security risk relating to “the military applications of the overall technical body of knowledge and experience of Aixtron.”

It wasn’t clear whether other parts of the deal could be salvaged. Officials at the German chip company and its would-be Chinese buyer, the Fujian Grand Chip Investment Fund, did not immediately comment.

By rejecting the deal, the Obama administration showed how far it would go to keep China from using its wallet to acquire sensitive technology from the West. It blocked previous Chinese technology purchases only indirectly, using an advisory panel of government and intelligence officials who can discourage — but not directly kill — foreign deals. That same panel earlier expressed skepticism over the Aixtron deal.

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