Trump orders Chinese-owned firm to unwind chip asset deal, citing national security risks

A company owned by a Chinese national was ordered to unwind a $2.9 million acquisition of chip assets from a U.S aerospace and defense navigation system manufacturer by President Donald Trump on Friday, citing national security concerns.

The White House said in an executive order that HieFo Corporation, incorporated in Delaware, was “controlled by a citizen of the People’s Republic of China.”

HieFo’s acquired the digital chips and related wafer design, fabrication, and processing businesses of New Jersey corporation Emcore on April 30, 2024, which could “impair the national security of the United States,” the White House said.

The Treasury Department said in a separate statement that the assets also included a semiconductor manufacturing facility.

The potential diversion of the supply of indium phosphide chips manufactured by Emcore’s digital chips business away from the U.S. was also identified as a national security risk, the Treasury Department added.

According to a statement from HieFo on Sept 2, 2024, the transaction would allow operations to continue at Emcore’s facility in Alhambra, California. HieFo added that it had “successfully engaged nearly all key scientists, engineers, and operation personnel” from Emcore at the time of the deal.

HieFo and Emcore did not immediately respond to a CNBC request for comment.

The Global Times, a Chinese government mouthpiece, citing an expert, said the divestment order “reflects Washington’s anxiety over technology competition with China” as it was made without a convincing rationale.

The Treasury Department said the deal was not notified to the Committee on Foreign Investment in the United States, known as CFIUS, prompting a review by its non-notified transactions team.

“CFIUS identified a national security risk arising from the transaction relating to potential access to EMCORE’s intellectual property, proprietary know-how, and expertise,” the Treasury Department said.

HieFo was ordered to divest all acquired assets within 180 days and to immediately restrict access to Emcore’s technical information.

In a statement dated Sept. 2, 2024, HieFo said the deal would allow operations to continue at Emcore’s facility in Alhambra, California, and that it had retained nearly all key scientists, engineers and operational staff.

HieFo was founded by Genzao Zhang and Harry Moore through a management buyout of wafer fabrication and chip-related assets from Emcore. Both founders list their start dates at HieFo as May 2024 on LinkedIn, when the acquisition closed.

The company claimed it had inherited more than 40 years of optoelectronic innovation in indium phosphide chip manufacturing.

Emcore manufactures navigation equipment such as gyroscopes and sensors used in commercial, industrial and defense applications, including autonomous navigation and weapons systems, according to its website.

The company was delisted from Nasdaq in early 2025 following its merger with aerospace manufacturing holding company Velocity One LP in November 2024.