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The US-China semiconductor cold war

The US-China semiconductor cold war

Rule Changes

How Washington is Wielding Investment Vetoes to Choke Off Beijing's Access to Critical Chip Technology

January 3rd, 2026: Treasury Confirms National Security Findings

Overview

Trump just blocked a $2.9 million chip deal that had already closed 20 months ago. On January 2, 2026, he ordered HieFo Corporation, a Delaware company controlled by Chinese national Genzao Zhang, to unwind its acquisition of EMCORE's indium phosphide semiconductor business and divest completely within 180 days. The transaction wasn't even on CFIUS radar when it closed in April 2024. But the chips HieFo acquired power navigation systems in missiles, submarines, and autonomous weapons—exactly the technology Washington is desperate to keep out of Beijing's hands.

This is the latest strike in a nine-year technological cold war; since Trump's first term, presidents have used CFIUS to systematically block Chinese access to American semiconductor technology, from billion-dollar deals to management buyouts. The stakes: military navigation independence or Western dependence. HieFo claims it's an American company with American management, but CFIUS sees a Chinese citizen controlling critical defense technology through a corporate shell.

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Key Indicators

$2.92M
Deal value HieFo paid
Tiny acquisition that triggered presidential intervention—size doesn't matter when tech is critical
180 days
Divestment deadline
HieFo must completely unwind the deal and return all assets by early July 2026
20 months
Time deal operated before block
Transaction closed April 2024; CFIUS didn't intervene until January 2026
98
Non-notified deals CFIUS investigated in 2024
Up from 60 in 2023—aggressive enforcement of transactions parties didn't voluntarily disclose

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People Involved

Organizations Involved

Timeline

September 2017 January 2026

11 events Latest: January 3rd, 2026 · 5 months ago Showing 8 of 11
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  1. Treasury Confirms National Security Findings

    Latest Statement

    Treasury detailed CFIUS findings: risk from potential access to EMCORE IP and diversion of indium phosphide chip supply from US defense customers.

  2. Trump Orders HieFo Divestment

    Presidential Action

    Trump signed executive order blocking HieFo's ownership of EMCORE assets and ordering complete divestment within 180 days, citing IP access and supply diversion risks.

  3. China Suspends Critical Minerals Export Ban

    Diplomacy

    China paused export ban on gallium, germanium, and antimony to US through November 2026 as part of trade truce.

  4. Trump-Xi Trade Truce Announced

    Diplomacy

    Trump and Xi struck deal in South Korea to delay new semiconductor tariffs until mid-2027, seeking to stabilize US-China tech tensions.

  5. Biden Tightens Semiconductor Export Controls

    Policy

    Biden expanded China chip controls, adding 140 companies to Entity List and restricting high-bandwidth memory and packaging equipment. China immediately banned gallium, germanium, and antimony exports to US.

  6. Treasury Expands CFIUS Enforcement Powers

    Regulatory

    Treasury issued final rule enhancing CFIUS authority to review historical deals and enforce compliance, effective December 26, 2024.

  7. HieFo Begins Operating Semiconductor Facility

    Operations

    Zhang and Moore officially started as HieFo CEO and co-founder, taking control of EMCORE's manufacturing facility and intellectual property.

  8. HieFo Acquires EMCORE Chip Business

    Transaction

    Genzao Zhang and Harry Moore completed $2.92 million management buyout of EMCORE's indium phosphide semiconductor operations in California.

  9. China Retaliates With Critical Minerals Ban

    Retaliation

    China imposed export restrictions on gallium and germanium—semiconductor materials the US doesn't domestically produce—following US chip controls.

  10. Biden Imposes Sweeping Semiconductor Export Controls

    Policy

    Biden administration restricted exports of advanced chips, chipmaking equipment, and design tools to China to impair AI and supercomputing capabilities.

  11. Trump Blocks First Chinese Chip Acquisition

    Presidential Action

    Trump blocked Canyon Bridge's $1.3 billion acquisition of Lattice Semiconductor, citing Chinese government funding and IP transfer risks. Only fourth presidential CFIUS block in history.

Historical Context

3 moments from history that rhyme with this story — and how they unfolded.

2017

Canyon Bridge-Lattice Semiconductor (2017)

Trump blocked a $1.3 billion Chinese state-backed buyout of Lattice Semiconductor, a US chipmaker, after CFIUS found national security risks from IP transfer and Chinese government funding. Canyon Bridge was a private equity fund created specifically to minimize CFIUS scrutiny, with China Reform Holdings as sole investor. CFIUS determined this was a cover transaction that couldn't obscure Chinese state control. The parties refiled their CFIUS notice three times attempting to address concerns before Trump ultimately ordered abandonment within 30 days.

Then

Deal collapsed; Lattice remained independent and US-controlled.

Now

Became the template for aggressive CFIUS enforcement against Chinese semiconductor acquisitions, establishing that complex corporate structures won't hide ultimate control.

Why this matters now

The HieFo case follows the same playbook: a small Delaware company created to acquire US chip assets, but with Chinese control CFIUS sees through. Like Canyon Bridge, HieFo's American incorporation didn't matter—control is what counts.

2012

Obama Blocks Ralls Wind Farm (2012)

President Obama ordered Ralls Corporation, owned by Chinese executives, to divest wind farm projects near restricted Navy airspace in Oregon. This was only the third presidential CFIUS block in history. Ralls sued claiming the order violated due process, marking the first constitutional challenge to a CFIUS presidential determination. The DC Circuit Court upheld presidential authority but required better process for disclosing unclassified evidence.

Then

Ralls divested the projects; legal challenge failed to overturn the order.

Now

Established that presidential CFIUS determinations are reviewable but courts defer heavily on national security findings. Set precedent that proximity to military installations triggers intense scrutiny.

Why this matters now

Shows that Chinese investors challenging presidential CFIUS blocks lose in court. If HieFo litigates, history suggests they'll fail. Also demonstrates CFIUS has no statute of limitations—even completed deals can be unwound.

2024

MineOne Cryptocurrency Mining Divestment (2024)

Biden's CFIUS forced Chinese-owned MineOne to divest cryptocurrency mining operations near a strategic missile base in Wyoming. The facility operated for two years before a public tip alerted CFIUS, which launched a non-notified transaction investigation. The case revealed CFIUS's expanding focus beyond traditional tech acquisitions to any foreign investment near critical infrastructure, and its reliance on tips to discover unreported deals.

Then

MineOne divested the Wyoming real estate and mining operations.

Now

Signaled that CFIUS will aggressively investigate historical transactions not voluntarily disclosed, and geography near military sites remains a red flag regardless of business sector.

Why this matters now

Like MineOne, the HieFo deal wasn't voluntarily disclosed to CFIUS and faced retroactive investigation. Both cases show CFIUS's 2024-2025 enforcement surge targeting non-notified transactions years after closing.

Sources

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