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December 9, 2016

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US block sees Chinese firm scrap tech deal

A Chinese company yesterday said it has scrapped plans to buy German semiconductor equipment maker Aixtron after US President Barack Obama blocked the deal on security concerns.

Fujian Grand Chip Investment Fund said its offer could no longer be fulfilled after Washington rejected the inclusion of Aixtron’s US unit over fears it could put sensitive technology with potential military applications in Chinese hands.

In a statement released on its website, the company said the block meant that the conditions of the deal “no longer can be fulfilled.”

“Any contracts based on the acceptance of the takeover offer will not become effective.”

The failure of the proposed 670-million-euro (US$714 million) takeover comes at a time of growing unease in the West about a recent slew of Chinese takeovers.

The death knell for the Aixtron deal came last week after a review by the Committee on Foreign Investment in the United States chaired by Obama found that the national security risks posed by the deal were too great.

In a statement on December 2, the US Treasury said Aixtron’s expertise in technology, which is 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 a Chinese firm.

The Treasury said Aixtron’s US business was an important contributor to that technology.

The troubled deal had also come under scrutiny in Germany where Chinese firms have bought a record number of tech companies this year.

After initially giving the proposed Aixtron takeover its blessing, the German government withdrew its approval in late October following security worries raised by Washington.

Citing German intelligence sources, Handelsblatt daily reported at the time that the US had expressed fears that China could use Aixtron technology to bolster its nuclear program.

In response, Germany’s economy ministry said it was putting the deal back under review.

The Chinese government has voiced frustration over the obstacles placed in the deal’s path, insisting that it concerned a “normal commercial acquisition” that should not be politicized.

The Treasury did not say what military application exactly of the German company’s technology had concerned US 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.

The Treasury said the deal would be financed by a unit of China IC Industry Investment Fund, a government-supported industrial investment fund designed to support the country’s integrated circuit industry.

Aixtron has some 750 employees in Germany and annual revenues of 200 million euros. Its US division in California employs around 100 people.

Fujian Grand said the shares of Aixtron investors who had already accepted the takeover offer would be returned next Tuesday.



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