March 9, 2017
National Security: CFIUS Strikes Again
This Akin Gump memo addresses recent action by CFIUS that effectively ended US based lighting & semiconductor maker Cree’s proposed sale of a division to a German company. Cree terminated the $850 million deal shortly after announcing that CFIUS raised objections to the deal & that the parties were working to address them.
The memo speculates that it was concerns over the Cree division’s silicon carbide technology – which is used in compound semiconductors – that may have prompted CFIUS to act. Other deals involving similar technology have also received a “thumbs down” from CFIUS. Here’s an excerpt summarizing the conclusions to be drawn from this most recent action:
This transaction highlights CFIUS’ focus on deals involving sensitive technology, particularly in the semiconductor sector. Since 2016, CFIUS or the President has effectively blocked a number of other transactions in the semiconductor industry involving Chinese buyers, including Aixtron-Fujian Grand Chip, GCS-San’an and Lumileds-GO Scale. With this latest outcome, CFIUS has indicated that these potential national security concerns are not limited to Chinese buyers and can arise in transactions with companies from closely allied countries.
– John Jenkins