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Trump orders cancellation of $2.9m chip deal on security grounds
US President Donald Trump has ordered the unraveling of a US$2.9 million computer chips and wafer fabrication deal involving HieFo, citing national security risks.
The order targets HieFo’s purchase of chip and wafer fabrication operations from Emcore, announced in May 2024.
It requires HieFo to divest the technology within 180 days due to “credible evidence” that the current owner is a citizen of the People’s Republic of China.
HieFo was founded by Dr. Genzao Zhang, formerly Emcore’s vice president of engineering, and Harry Moore.
After the deal closed, HieFo said the team in Alhambra, California, would largely remain.
Emcore was a public company at the time of the sale but was taken private by Charlesbank Capital Partners in 2025.
HieFo did not immediately respond to a request for comment.
🔗 Source: Associated Press
🧠 Food for thought
Implications, context, and why it matters.
Order targets InP photonics with national security sensitivities
- Trump’s order directs sale of Emcore’s indium phosphide (InP) wafer fabrication operations and its Chips business that built optoelectronic devices for telecom, datacom plus AI connectivity 12. These were not commodity semiconductors 12.
- InP photonics power high speed optical communications 3. Treasury warned of possible diversion of indium phosphide chips from Emcore’s Digital Chips Business (the InP chip unit) away from the United States 3.
- Committee on Foreign Investment in the United States (CFIUS) imposed access limits on the Emcore Assets 1. HieFo had seven days to put controls in place 1.
- The $2.92 million deal included equipment, contracts, intellectual property, plus inventory from a California site 2. HieFo hired nearly all scientists, engineers, and operations staff from Emcore’s discontinued Chips business 2.
Chip M&A advisors can meet rising demand for CFIUS risk checks and ownership diligence
- Investment banks and M&A advisors can offer tighter CFIUS screening to semiconductor buyers 4. This unwind makes clear that even $2.9 million deals or management buyouts face retrospective scrutiny 4.
- Legal and compliance firms can map beneficial ownership chains (who ultimately controls an entity) since HieFo is controlled by a People’s Republic of China (PRC) citizen though it is a Delaware corporation 1.
- Regulatory technology (RegTech) vendors for dealmakers can compile databases of CFIUS sensitive categories 5. InP photonics, quantum, and AI chips should trigger flags below $10 million 5.
- The order sets a 180 day divestment timeline with weekly compliance certifications 1. That schedule drives demand for transaction monitoring and asset disposition services that navigate CFIUS approval requirements 1.
