US moves to block Chinese purchase of German tech firm Aixtron

By Paul Handley, AFP

WASHINGTON–U.S. President Barack Obama on Friday moved to block a Chinese company’s purchase of German semiconductor equipment maker Aixtron by rejecting the inclusion of Aixtron’s U.S. business in the deal. The U.S. Treasury Department said a review by the Committee on Foreign Investment in the United States (CFIUS) chaired by Obama found the risks posed by the deal, which could place sensitive technology with potential military applications in Chinese hands, were too great. “CFIUS and the president assess that the transaction poses a risk to the national security of the United States that cannot be resolved through mitigation,” the Treasury said in a statement. It said publicly traded Aixtron SE’s expertise in technology key to making advanced compound semiconductors used for LED lighting, lasers and solar cells also has military applications. Washington does not want to see such technology end up in the hands of the Chinese government-backed company which wants to buy Aixtron, Grand Chip Investment. The Treasury said Aixtron’s U.S. business is an important contributor to that technology. In late October, the German government withdrew its initial approval for the 670 million euro (US$714 million) takeover after Washington raised security concerns. Citing German intelligence sources, Handelsblatt daily reported that the United States had expressed fears that China could use Aixtron technology to bolster its nuclear program. After receiving the information, the German economy ministry said on Oct. 24 that it would reopen its review of the deal. Chinese Government Role Cited The U.S. Treasury said Friday that Grand Chip is a German company expressly set up for the deal and is “ultimately owned by investors in China, some of whom have Chinese government ownership.” It added that the deal would be financed by a unit of China IC Industry Investment Fund, a Chinese government-supported industrial investment fund designed to support the country’s integrated circuit industry. The Treasury statement did not say what military application of the German company’s technology had concerned U.S. officials. Aixtron’s specialty is a technology for depositing thin layers of atoms on semiconductor wafers that are used in electronic devices and systems that produce, control and convert light. It is popularly used in making solar cells.

Chinese Foreign Ministry spokesman Geng Shuang warned against interference, in comments to AFP. “This acquisition you mentioned is a normal business activity,” he said. “Since it’s a normal commercial acquisition, it should follow the normal principles and the rules of the market. We hope that there will not be an excessive political interpretation on this acquisition or political interference in it.”