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The US-China semiconductor cold war

The US-China semiconductor cold war

Rule Changes

Washington Clamps Down on Chinese-Owned Defense Chip Factories While Reopening the AI Chip Door to Beijing

May 13th, 2026: Trump Makes State Visit to Beijing With Musk, Cook, and Jensen Huang

Overview

Trump's January 2026 order forcing HieFo Corporation to unwind its $2.92 million purchase of EMCORE's indium phosphide chip business reaches its 180-day deadline in early July 2026. HieFo (controlled by Chinese national Genzao Zhang) has filed weekly compliance certifications to CFIUS. It must fully divest the California semiconductor facility, intellectual property, and military chip operations it acquired in April 2024.

Trump's approach split visibly in January 2026. The same week he ordered HieFo to return defense chip assets to US control, Commerce approved Nvidia H200 exports to China with a 25% tariff. Congress struck back with the AI OVERWATCH Act in January and the MATCH Act in April—and Trump's May state visit to Beijing with Elon Musk, Tim Cook, and Jensen Huang deepened the conflict between security enforcement and commercial engagement.

Why it matters

Which chips Washington lets China buy—and which factories Beijing can control—shapes how the next war is fought.

Questions about this story

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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
18 days
To HieFo divestment deadline
HieFo must return all EMCORE assets by July 1, 2026—non-compliance risks criminal penalties
25%
Tariff on H200 exports to China
Trump approved Nvidia H200 AI chip sales to China—same week CFIUS ordered HieFo to divest its defense chips
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 May 2026

16 events Latest: May 13th, 2026 · 1 month ago Showing 8 of 16
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  1. Trump Makes State Visit to Beijing With Musk, Cook, and Jensen Huang

    Latest Diplomacy

    Trump arrived in China for a state summit with Xi Jinping, with Elon Musk, Tim Cook, and Nvidia CEO Jensen Huang in the delegation. AI chip export controls, H200 licenses, and Chinese rare earth restrictions were the central tech issues on the table.

  2. US-China Trade Truce Cuts Tariffs Sharply

    Diplomacy

    US and China agreed to cut tariffs: US duties on Chinese goods fell from 145% to 30%, Chinese duties on US goods from 125% to 10%. AI chip export controls remained unresolved heading into the Beijing summit.

  3. MATCH Act Introduced in Congress

    Legislation

    Senate and House lawmakers introduced the MATCH Act to ban sales of deep ultraviolet lithography equipment to China and add SMIC, CXMT, YMTC, and Huawei to restricted lists. The House Foreign Affairs Committee advanced it in what lawmakers called the largest semiconductor export control markup in congressional history.

  4. AI OVERWATCH Act Clears House Foreign Affairs Committee

    Legislation

    The House Committee on Foreign Affairs voted 42-2-1 to advance the AI OVERWATCH Act. The bill would give Congress a 30-day window to veto AI chip export licenses before they take effect, covering sales to China, Russia, and Iran.

  5. Commerce Allows H200 Chip Exports to China

    Policy

    BIS shifted export review for Nvidia H200 and AMD MI325X chips from 'presumption of denial' to case-by-case review, with a 25% tariff and a 50% volume cap relative to US domestic sales. The reversal came 13 days after Trump ordered HieFo to divest EMCORE's defense chip assets.

  6. Treasury Confirms National Security Findings

    Statement

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

  7. 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.

  8. 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.

  9. 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.

  10. 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.

  11. Treasury Expands CFIUS Enforcement Powers

    Regulatory

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

  12. 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.

  13. 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.

  14. 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.

  15. 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.

  16. 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

(22)