What's Happening?
President Trump has issued an executive order to halt a $2.9 million semiconductor deal between Emcore Corp. and HieFo Corp., citing national security concerns. The deal, initially announced during President Joe Biden's administration in May 2024, involved
the sale of Emcore's computer chips and wafer fabrication operations to HieFo. The transaction included the assumption of approximately $1 million in liabilities. The executive order requires HieFo to divest the acquired technology within 180 days, based on 'credible evidence' that the current owner is a citizen of the People's Republic of China. HieFo, founded by Dr. Genzao Zhang and Harry Moore, had planned to continue operations in Alhambra, California, with a focus on innovative solutions, including artificial intelligence. Emcore was a publicly traded company at the time of the deal but was later taken private by Charlesbank Capital Partner.
Why It's Important?
This executive order underscores the Trump administration's focus on safeguarding U.S. national security interests, particularly in the technology sector. By intervening in this deal, the administration aims to prevent potential foreign influence over critical technology that could be used in sensitive applications, such as artificial intelligence. The decision reflects broader concerns about foreign ownership of U.S. technology companies, especially those with ties to China. This move could have significant implications for U.S.-China relations and may influence future foreign investments in the U.S. technology sector. Companies involved in similar transactions may face increased scrutiny, potentially affecting their business operations and strategic decisions.
What's Next?
HieFo Corp. is required to divest the technology acquired from Emcore within 180 days. The company has not yet responded to the executive order, and its next steps remain uncertain. The divestment process will likely involve legal and financial considerations, as well as potential negotiations with U.S. authorities. Other companies with foreign ownership may also reassess their strategies to ensure compliance with U.S. regulations. The administration's decision could prompt further policy discussions on foreign investments and national security, potentially leading to new legislative measures or executive actions.
