Chinese deal makers may soon find it even harder to get investments and acquisitions through. Lawmakers in Washington introduced a bill late last year that would widen Cfius’s remit, giving it oversight over more types of deals and, in particular, those that move advanced technologies into foreign hands.
The intensified scrutiny comes as China’s government is ramping up a plan, called “Made in China 2025,” to use state support and overseas acquisitions to dominate high-tech fields such as big data, advanced robotics and electric cars.
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The two countries have clashed over computer chips before. In September, the Trump administration blocked the $1.3 billion purchase of Lattice Semiconductor, an American chip manufacturer, by a Chinese-funded private equity firm.
Tensions have also flared over technology deals that involve sensitive personal data. In January, regulatory worries caused the collapse of a plan by Ant Financial, a sister company of the Alibaba Group, the Chinese e-retailing giant, to buy MoneyGram, the money-transfer provider. That deal would have been worth $1.2 billion.
In scuttling the purchase of Xcerra, American officials have struck at a major priority area for China’s innovation policies.
China is the world’s biggest exporter of electronic devices. But to churn out all those smartphones, computers and other equipment, it must still import most of the electronic brains inside them. That has led the government in Beijing to try to supercharge its domestic chip industry.
Progress so far has been mixed. Despite government subsidies, the technologies at China’s leading chip makers remain generations behind those at Intel, Samsung and Taiwan Semiconductor Manufacturing Company.
In the business of semiconductor assembling, packaging and testing, however, China has surged to become a world leader. Xcerra designs and makes equipment to test chips, but it doesn’t manufacture chips themselves.