Will the Obama Administration Restrict Chinese Investment in the U.S. Semiconductor Sector?

5 Jan

There is one thing that President Barack Obama and President-elect Donald Trump appear to agree on: Chinese investment in the United States needs to be scrutinized more closely, and even restricted in some sectors. Before President Obama leaves office on Jan. 20 a report will be published about Chinese investment in the U.S. semiconductor sector that will include recommendations intended to bolster protection of an industry important for national security.

The U.S. government places special importance on the semiconductor sector as it manufactures computer chips for so many things: smartphones, satellites, energy grids, and even missiles. Washington worries Beijing could through acquisition of U.S. semiconductor makers compromise U.S. national security by gaining access to classified communications and military weapons systems.

In an interview with The Wall Street Journal, Commerce Secretary Penny Pritzker noted China’s $160 billion plan to establish itself as the world’s No. 1 IC maker as a reason for the report. “We are seeing new attempts by China to acquire companies and technology based on their government’s interests—not commercial objectives,” Pritzker said. “We will not allow any nation to dominate this industry and impede innovation through unfair trade practices and massive, non-market-based state intervention.”

Experts say the report may include recommendations that the Committee on Foreign Investment in the U.S. (CFIUS) review Chinese investments in U.S. assets more closely, especially in the IC industry. The report will detail Beijing’s efforts to control the global semiconductor market. According to sources cited by The Wall Street Journal, new export controls and restrictions on joint-ventures with Chinese firms could be forthcoming.

Last month the Obama administration blocked the proposed sale of Aixtron SE of Germany—which has a U.S. subsidiary—to Grand Chip Investment GmbH, the German unit of China’s Fujian Grand Chip Investment Fund.

Image: Flickr/dcblog CC BY 2.0

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