Reports suggest CFIUS may block the deal over security concerns. If more than just a rumor, these concerns would be new and unexpected.
Reports that the Committee on Foreign Investment in the United States (CFIUS) may yet recommend the Infineon Technologies acquisition of Cypress Semiconductor be blocked on the grounds of national security risks have triggered falls in the shares of both companies. But is this just market rumor?
Last month during the company’s analyst call, Infineon CEO Reinhard Ploss intimated that negotiations over the €9 billion (about $10.1 billion) deal were in the final stages. Ploss said Infineon had made progress with antitrust clearances, and that it was in constructive dialog with CFIUS. He had also said, “We have a very good understanding about the requirements of U.S. government, what they expect. And we are working together with them in order to resolve that.”
But a report yesterday seems to have suggested that while U.S. officials had flagged the acquisition could pose a national security risk, Infineon was unable to reach an agreement with the government to allow the takeover to go ahead. We contacted Infineon for a comment to which a spokesperson responded, “We do not comment on ongoing processes.”
And elsewhere, Vijay Rakesh, analyst at Mizuho Securities said he’d spoken to Cypress’ management who had indicated the latest CFIUS headline appeared to be a surprise to the company. Rakesh seems to think the deal will still close, but in a worst-case scenario it would be delayed. A follow up article in Bloomberg suggested the same, but raises the broader question of how the U.S. is using CFIUS and having Chinese customers as the basis to block both acquisitions and trade, particularly for those with Huawei as a major customer.