Washington, D.C. – President Donald Trump has mandated the unwinding of a $2.9 million transaction involving a Chinese-controlled company and American chip assets, citing significant national security concerns. The White House issued an executive order this week ordering HieFo Corporation, a Delaware-registered entity, to reverse its acquisition of digital chip technologies from Emcore Corporation, based in New Jersey.
The order stems from apprehensions that HieFo, which is controlled by a Chinese national, poses a risk to U.S. national security, particularly regarding the supply of indium phosphide chips produced by Emcore. The Treasury Department noted that the deal had not been reported to the Committee on Foreign Investment in the United States (CFIUS), triggering a review concerning non-notified transactions.
According to officials, the potential access to Emcore’s proprietary intellectual property and specialized knowledge was flagged during the CFIUS review, which contributed to the determination that the acquisition posed a risk. The Treasury Department emphasized the necessity of protecting U.S. technological advancements from foreign influence.
This acquisition, completed on April 30, 2024, included Emcore’s digital chips and related manufacturing capabilities. HieFo’s viability was initially touted by the company as a way to sustain operations at Emcore’s facility in Alhambra, California, where key personnel were said to have been successfully retained.
In response to the divestment order, HieFo has been given a 180-day deadline to dispose of the acquired assets and to limit access to technical information regarding Emcore’s operations. The urgency of this action reflects ongoing tensions between the U.S. and China over technological supremacy.
Critics of the order, including commentators in Chinese media, argue that the U.S. is exhibiting paranoia regarding technological competition without substantial justification. The Global Times, a state-run outlet, expressed skepticism about the rationale behind the restrictions imposed on HieFo.
Emcore specializes in developing advanced navigation technologies, including sensors and gyroscopes utilized in various commercial and defense sectors. The company’s profile includes significant contributions to autonomous navigation and other critical applications. However, it recently faced challenges, including being delisted from the Nasdaq following a merger with Velocity One LP.
The ongoing situation illustrates the complexities of international business dealings involving sensitive technologies, highlighting the heightened scrutiny such transactions face amid geopolitical uncertainties. As the U.S. continues to reevaluate its approach to foreign investments in critical sectors, concerns over national security remain at the forefront of policymaking.
