US President Barack Obama is poised to block a Chinese company from buying Germany’s Aixtron SE, people familiar with the matter said, which would mark only the third time in more than a quarter century that the White House has rejected an investment by an overseas buyer as a US security risk.
The president was yesterday expected to uphold a recommendation by the Committee on Foreign Investment in the US (CFIUS) that the sale of the semiconductor-equipment supplier to China’s Grand Chip Investment GmbH should be stopped, according to the people, who asked not to be identified as the details are not public.
Blocking the 670 million euro (US$715 million) acquisition would mark the second time Obama has rejected a deal on US security grounds. The first was in 2012 when he stopped Chinese-owned Ralls Corp from developing a wind farm near a navy base in Oregon. Before that, in 1990 then-president George H.W. Bush stopped a Chinese acquisition of MAMCO Manufacturing Inc, an aircraft-parts maker.
The CFIUS has a say in the Aixtron deal because the company has a subsidiary in California and employs about 100 people in the US, where it generates about 20 percent of its sales.
Aixtron technology can be used to produce light-emitting diodes, lasers, transistors, solar cells, among other products, and can have military applications in satellite communications and radar. Northrop Grumman Corp, a major US defense contractor, is among its customers, according to a Bloomberg supply chain analysis.
“It will be extremely difficult for China’s state-owned enterprises to do deals in the semiconductor industry looking forward,” Center for China and Globalization deputy director He Weiwen (何偉文) said. “It definitely posts a negative impact on China-US relations, but the damage is limited.”
The decision comes at a crucial moment for US-China relations. US president-elect Donald Trump has accused China of carrying out unfair trade practices that hurt US workers. He has vowed to brand China a currency manipulator and said he would impose tariffs on Chinese goods.
Meanwhile, Chinese companies are investing more in the US than ever. Chinese foreign direct investment in the US reached a record US$15.3 billion last year, according to Rhodium Group.
Notable investments by Chinese companies include the purchase of Smithfield Foods Inc by WH Group Ltd (萬洲國際) in 2013 and China National Chemical Corp’s (中國化工) bid for Syngenta AG, which the CFIUS cleared in August.
Dalian Wanda Group Co (大連萬達集團) is expanding in Hollywood with its purchases of film producer Legendary Entertainment LLC and the second-biggest US cinema operator, AMC Entertainment Holdings Inc.
Chinese investment in the US has drawn growing concern from Capitol Hill. Lawmakers pushed the Government Accountability Office to review whether the CFIUS’ scope should be expanded.
US Senator Chuck Schumer also wrote to US Secretary of the Treasury Jacob Lew saying that he is concerned about the growing number of acquisitions of US companies by Chinese state-owned buyers.
Schumer promised US Congress would work on legislation to expand the CFIUS’ oversight.
Real estate agent and property developer JSL Construction & Development Co (愛山林) led the average compensation rankings among companies listed on the Taiwan Stock Exchange (TWSE) last year, while contract chipmaker Taiwan Semiconductor Manufacturing Co (TSMC, 台積電) finished 14th. JSL Construction paid its employees total average compensation of NT$4.78 million (US$159,701), down 13.5 percent from a year earlier, but still ahead of the most profitable listed tech giants, including TSMC, TWSE data showed. Last year, the average compensation (which includes salary, overtime, bonuses and allowances) paid by TSMC rose 21.6 percent to reach about NT$3.33 million, lifting its ranking by 10 notches
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