U.S. Treasury says China private equity's Magnachip purchase poses security risks

MagnaChip Semiconductor

31/08/2021 04:50

SEOUL, Aug 31 (Reuters) - The U.S. Treasury Department said
the acquisition of Magnachip Semiconductor Corp  MX.N  by a
Chinese private equity firm posed "risks to national security",
in another hurdle for Chinese companies trying to invest abroad
in critical tech industries. 
    In March, Chinese private equity firm Wise Road Capital
agreed to acquire system chip manufacturer Magnachip in a deal
valued at $1.4 billion.  urn:newsml:reuters.com:*:nASA01XPK
    Since then, regulatory authorities in countries including
the United States and South Korea have been reviewing the deal.
Magnachip, which produces display and power chips, has
production and R&D facilities based in South Korea. 
   Magnachip said in a SEC filing on Monday the U.S. Department
of Treasury, in a letter to the company's legal counsel last
Friday, said the acquisition posed "risks to the national
security of the United States," and expects to seek President
Joe Biden's decision on the matter. 
    CFIUS, a committee under the U.S. Department of Treasury,
had ordered the deal to be put on hold in June.
    The filing to the U.S. Securities and Exchange Commission
did not specify the nature of the risks. 
    Magnachip was assessing its next steps, but cannot give
assurance that it would agree to proposals that would facilitate
clearance by CFIUS, the filing said. A spokesperson for
Magnachip declined further comment. 
    A global shortage of chips has slowed production in the
automobile and tech industries, fuelling calls for the United
States to rely less on China and leading to efforts such as the
U.S. Senate passing the "U.S. Innovation and Competition Act"
which authorised about $190 billion for provisions to strengthen
U.S. technology and research.  urn:newsml:reuters.com:*:nL2N2NX2OK
    

 (Reporting by Joyce Lee; Editing by Jacqueline Wong)
 ((jungyoon.lee@tr.com; +82 2 6936 1467;))