In a rare move, authorities in United States have cleared the sale of an American company called Akrion Systems LLC to a Chinese backed semiconductor company called Naura Technology Group Co., Ltd.
In the recent months, US has aggressively blocked the acquisition of US companies by Chinese conglomerates.
United States and China are two of the largest economies in the world. Both countries consider the other as a partner in trade and an adversary in geopolitics. The two countries have established a robust framework of trade. Currently, the US-China trade relationship supports around 2.6 million jobs in the United States. In 2015, China purchased $165 billion in goods and services from the United States in 2015.
However, US President Donald Trump has drawn the hardline against Chinese takeovers of American businesses. When he was running for the Presidency, he was often critical of the role played by China in hurting the American economy. He has been a proponent of the “Make in America” movement.
In September 2017, the US administration has played a direct role in blocking the sales of American companies to Chinese conglomerates. In September 2017, news emerged that US President Donald Trump blocked the sale of an American technology company called Lattice Semiconductor to a Chinese-backed organization called Canyon Bridge Capital Partners, LLC. At the time, U.S. Treasury Secretary Steven Mnuchin said in a statement, “Today, consistent with the administration's commitment to take all actions necessary to ensure the protection of U.S. national security, the president issued an order prohibiting the acquisition.” He added that, “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.” In November Liu Zhongtian, a Chinese metals entrepreneur, abandoned a $2.3bn deal to acquire US aluminium producer Aleris. In January 2018, US blocked the sale of money-transfer service Moneygram to Ant Financial, an affiliate of Chinese e-commerce giant Alibaba. The sale had been worth $1.2 billion.
Naura Technology Group Co., Ltd. is a enterprise of integrated circuit high-end technological equipment in China. It was formed through a strategic restructuring between Beijing Sevenstar Electronics Co., Ltd. (Hereinafter referred to as Sevenstar Electronics) and Beijing North Microelectronics Co., Ltd. (Hereinafter referred to as NMC).
United States has cleared the sale of Akrion Systems LLC, which is an American company to Naura Technology Group Co., Ltd, which is backed by China. US has repeatedly noted that the sale of these American companies could compromise US security.
This move is likely to ease the minds of business leaders who have voiced concerns that the US government has been denying such acquisitions as a tool against China. “Despite a heightened US government review of Chinese investments, the parties obtained the Cfius approval in less than three months,” said a spokesperson for Gibson Dunn, which represents Naura. The spokesperson also added, “This accomplishment is especially significant in light of the US government’s noted concerns about Chinese acquisitions in general, and semiconductor company acquisitions in particular. To make the Cfius approval even more noteworthy is that Naura is also a state-owned company.”
Our assessment is that despite the latest development, concerns remain that US is using the blocking of such acquisitions as a tool against China. Other sales that are currently threatened by the political climate include the China Oceanwide Holdings Group's $2.7 billion purchase of US life insurer Genworth Financial and the acquisition of US mobile marketing firm AppLovin by Orient Hontai Capital's $1.4 billion.