Investments in US companies will be scrutinized more closely in the future. This is to ensure technological leadership, national security, and privacy. Foreign investments in the United States have been screened for their compatibility with national security since 1988. The Committee on Foreign Investment in the United States (CFIUS) is responsible for this. According to a decree by US President Joe Biden, this should significantly expand his reviews: in the future, investments should also be examined with a view to their effects on the country's technological leadership.
The decree particularly highlights a number of sectors that the committee should monitor: in addition to microelectronics, there are AI, biotechnology, quantum computers, renewable energies, "climate change adaptation technologies" and natural resources.
The CFIUS review aims to prevent companies or entire industries from falling under foreign control and allowing "competing or opposing states" to export knowledge or gain influence on relevant supply chains, which is seen as a threat to national security. This is broadly defined in the order, expressly not only suppliers to the military are to be checked.
If the committee recognizes such a danger, it can prohibit investments or takeovers, which does happen: In 2017, the takeover of Wolfspeed by Infineon was prohibited, and Infineon also had to tremble about the takeover of Cypress. However, the target of the new decree is China, even if it is not explicitly named: The sectors mentioned coincide with the most recent export restrictions.
In addition, investments by "persons with the possibility and aim of carrying out cyber break-ins or other malicious, cyber-based activities" should also be checked, and data protection should also play a role. In addition, one should look beyond individual investments in order to avoid influence through coordinated minority holdings.
Once a tool against Japan
The CFIUS has been able to ban investments and takeovers since 1988. The committee was given the authority due to fears that Japanese companies could gain too much influence over US companies. The background was a planned takeover of Fairchild Semiconductor, which also produces semiconductors for the US military, by Fujitsu. The CFIUS is in the context of the Defense Production Act (DPA), which allows the US President to order the production of certain goods.
President Joe Biden has used the DPA six times in his term of office to date - for products as diverse as respiratory masks in the corona pandemic, fire hoses, components for submarines, and baby food.