Trump Intervenes to Block Semiconductor Acquisition Citing Critical National Security Threats

In a decisive move to safeguard the United States' technological edge, President Donald Trump signed an executive order on Friday to halt and unwind a multimillion-dollar semiconductor deal involving assets critical to the aerospace and defense sectors. The presidential mandate targets the acquisition of New Jersey-based Emcore Corporation's digital chip operations by HieFo Corporation, a Delaware-registered firm that federal investigators have linked to Chinese ownership. Citing "credible evidence" that the transaction could impair the national security of the United States, the order effectively nullifies a deal that was originally finalized during the previous administration in April 2024. The White House has directed HieFo to divest all interests and rights in the Emcore assets within 180 days, a process that will be strictly monitored by the Committee on Foreign Investment in the United States (CFIUS).

The assets at the heart of this geopolitical friction include Emcore’s specialized indium-phosphide wafer-fabrication operations and its digital chips business, which were sold to HieFo for approximately $2.92 million. While the transaction size is relatively small by global industrial standards, the strategic importance of the technology specifically its applications in high-frequency communications and advanced defense systems has drawn intense scrutiny from the Treasury Department and intelligence officials. According to the executive order, HieFo is controlled by a citizen of the People's Republic of China, raising concerns that the proprietary know-how and intellectual property associated with these chips could be diverted to foreign interests. This move underscores the administration's tightening grip on foreign influence within the domestic semiconductor supply chain, signaling that no transaction is too small to escape the lens of national security oversight.

The enforcement of this divestment follows an exhaustive investigation by CFIUS, which identified risks regarding the potential loss of domestic control over critical manufacturing expertise. Federal employees have been authorized to access HieFo’s premises to ensure compliance, and the company is required to provide weekly certifications of its adherence to the order. This intervention reflects a broader, more aggressive stance in the ongoing technological rivalry between Washington and Beijing, where control over "dual-use" technologies those with both civilian and military applications has become a primary battleground. Analysts suggest that by unwinding a deal that had already been integrated for nearly two years, the administration is sending a clear message to international investors and domestic tech firms that previous approvals or lack of oversight will not guarantee the permanence of future cross-border acquisitions.

The targeted technology, particularly indium-phosphide-based photonics, is essential for the next generation of optical communications and AI-driven data centers. Dr. Genzao Zhang, a former executive at Emcore and the current CEO of HieFo, had previously stated that the technology would remain in the United States for development; however, the President's order indicates that the risk of foreign control outweighed any domestic operational assurances. As the 180-day countdown for divestment begins, the Treasury Department has made it clear that any prospective buyers of these assets must be vetted and approved by the government to ensure the technology remains within a secure and reliable supply chain. This latest executive action marks a significant escalation in the use of the Defense Production Act to protect the American semiconductor landscape from foreign adversarial influence.