The U.S. Treasury Department flagged the acquisition of Magnachip Semiconductor Corp by a Chinese private equity firm over national security risks.
Regulators in the U.S. and South Korea, where the firm’s production and R&D facilities are based, have been reviewing the acquisition since March when Chinese private equity firm Wise Road Capital agreed to acquire the chip manufacturer in a deal valued at $1.4 billion.
In June, the Committee on Foreign Investment in the United States (CFIUS) – a committee under the U.S. Department of Treasury – had ordered the deal to be put on hold.
Joe Biden’s Call
In an SEC filing, Magnachip said a U.S. Department of Treasury letter to the company’s legal counsel noted that the acquisition posed «risks to the national security of the United States» and expects to seek President Joe Biden’s decision on the matter.
Magnachip said it was assessing its next step but could not give assurance that it would agree to proposals that would facility clearance by CFIUS.
The world is undergoing a chips shortage which has impacted various industries including automobile and technology. Vice president Kamala Harris was recently on a three-day visit to Singapore to discuss, amongst other topics, the semiconductor shortage during a roundtable that includes financial institutions including Singapore’s state-owned investment arm Temasek and Blackrock.
