Sale of Sunnyvale Chipmaker Shot Down by Obama Over National Security Concerns

President Barack Obama has shot down the sale of Sunnyvale semiconductor firm Aixtron to a China-linked firm over national security concerns.

China on Monday issued an official complaint and questioned Obama's motives.

The company trying to buy Aixtron and its German parent firm Aixtron SE for $714 million is owned by Chinese investors with links to Chinese state enterprises, the U.S. Department of the Treasury said in a news release Friday. Obama and the federal inter-agency Committee on Foreign Investment in the U.S. concluded that the sale to Fujian Grand Chip would threaten America's security, the department said.

Aixtron's technology has military applications, according to the department.

Determinations about potential military uses of particular semiconductor technologies may come down to whether they can produce chips capable of ultra-high performance or which can withstand extremely severe environments, said Joel Espelien, senior analyst with TDG Research.

The U.S. president can torpedo acquisitions when there is "credible evidence that the foreign interest exercising control might take action that threatens to impair national security," according to the Treasury Department.

And while Obama's move represented a blunt-force approach to the problem of protecting America from technological threats, it's about the only tool available for policing such a fast-moving sector, Espelien said.

"Bureaucratic regulation can't do the job," Espelien said. "The technology ecosystem is too dynamic, it's too complex -- there's just no way to write generic rules that aren't hopelessly easy to circumvent.

"If you're not going to have this bureaucratic overlay over everything, which a lot of people would hate, you have to do these case-by-case interventions."

China on Monday called Obama's decision "pure market behavior," the Associated Press reported. "We hope that the United States will cease making groundless accusations about Chinese companies and will provide a fair environment and favorable conditions for investment by them," China's foreign ministry spokesman Lu Kang...

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