President Obama Prohibits Acquisition of Aixtron’s U.S. Business

The U.S. president has prohibited the acquisition of Aixtron SE’s U.S. business by Chinese investment firm, Grand Chip Investment. (ref: article). The order follows the advice of the Committee on Foreign Investment in the United States (CFIUS) and the U.S. Treasury Department.

President Barack Obama issued the order prohibiting the acquisition of the U.S. business of German MOCVD equipment maker Aixtron by Chinese investment firm, Fujian Grand Chip Investment (Grand Chip Investment) or its parent companies, or partners, either directly or indirectly.

The order defines the U.S. business of Aixtron to include Aixtron, Inc. and any of its assets such as U.S. patents and patent applications, used in or owed for the use in or benefiting interstate commerce in the United States.

Aixtron points out that the order was limited to the Aixtron’s U.S. business, and does not prohibit the acquisition of Aixtron shares and ADS by Grand Chip Investment.

The full text of the order is available at: https://www.whitehouse.gov/briefing-room/presidential-actions.

In the order, the president said that GCI and its partners, subsidiaries or affiliates “might take action that threatens to impair the national security of the United States.”

While not specifically mentioned, Aixtron has patents and technology related to the production of gallium nitride-based components that are integral for radar, and jammers of radar and radio frequency signals. Insiders have speculated that it is this GaN component fabrication technology that poses the greatest national security concern.

The U.S. portion of Aixtron has been awarded a total of nearly $1.3 million in U.S. defense contracts from 2001 through 2015.

The order directs the purchasers and Aixtron to permanently abandon the proposed acquisition within 30 days (unless the CFIUS extends the date for up to 90 days).

Both GCI and Aixtron said that they are “coordinating with the German Federal Financial Supervisory Authority (BaFin) to examine the consequences of the order on the takeover process.”