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Lessons From Recent Decisions by US Foreign Investment Authorities
Lessons From Recent Decisions by US Foreign Investment Authorities
29 January 2026
Series
Blogs
29 January 2026
On January 2, 2026, President Trump ordered the divestment of the “digital chips” business of EMCORE Corporation by HieFo Corporation, a Delaware corporation controlled by an individual from China. This transaction marked only the 11th formal use of a President’s power to prohibit a transaction after it had been reviewed by the Committee on Foreign Investment in the United States.
The transaction reviewed by CFIUS in this case took place in 2024 and involved the assets of EMCORE’s non-core wafer design, fabrication, and processing business, including a California-based semiconductor manufacturing facility. Of particular interest to CFIUS, as noted in a Treasury Department statement accompanying President Trump’s order, were assets previously used by EMCORE to fabricate indium phosphide (InP) wafers. InP wafers are compound semiconductors used in a variety of optoelectronic and high-speed communications applications. EMCORE’s InP technology and facilities were used by HieFo to make lasers for fiber optic transceivers, but CFIUS likely also considered a reportedly emerging use for InP technology in quantum computing.
EMCORE had represented in the asset purchase agreement for the transaction that the divested business did not develop or produce “critical technologies,” defined by CFIUS as technologies subject to certain categories of US export controls. Thus, absent 49 percent foreign government ownership of HieFo, a pre-closing CFIUS filing was not required. Nevertheless, as with all foreign acquisitions of control of US businesses, CFIUS had jurisdiction over the HieFo-EMCORE transaction and therefore was able to call in the transaction for a post-closing review.
By letting the process reach that point, the parties seem not to have learned the lessons of several previous transactions in which CFIUS has objected to semiconductor sector investments from China (and in some cases, other countries), including Fujian Grand Chip-Aixtron (Presidential block, 2016), Canyon Bridge-Lattice (Presidential block, 2017), and Wise Road-Magnachip (abandoned due to CFIUS objections, 2021). The 2016 Aixtron case should have been particularly instructive to HieFo and EMCORE, as it involved technology used to make compound semiconductors.
CFIUS frequently reiterates the point that it reviews each transaction on its individual merits, but the HieFo-EMCORE decision is only the most recent example of a longstanding pattern of adverse decisions. Therefore, before pursuing investments in the US semiconductor sector, investors from China should consider the material CFIUS risk. This risk is underscored by the US government’s demonstrated aversion to US support for China’s technological growth in the semiconductor and quantum computing sectors, as reflected in Executive Order 14105 that gave rise to the US Outbound Investment Security Program and the enactment in December 2025 of the Comprehensive Outbound Investment National Security Act of 2025, which codifies the Outbound Investment Security Program.
On January 8, 2026, the Federal Communications Commission entered into a consent decree with Marlink, Inc. in which the FCC determined that Marlink, a US company authorized by the FCC to provide international carrier services and operate satellite ground stations, had failed to allow the US Department of Justice to screen 186 foreign nationals before they were granted access to Marlink’s communications infrastructure and/or customer data. Marlink had committed to allow such pre-screening, along with other conditions, as part of a May 5, 2022, Letter of Agreement (LOA) issued to DOJ in connection with the FCC’s approval of the acquisition of a controlling interest in Marlink by P8 Holding 1 S.à r.l., a Luxembourg entity ultimately controlled by US-based Providence Equity Partners, from funds affiliated with France-based Apax Partners SAS.
DOJ was involved with the Marlink FCC approval process as the chair of the Committee for the Assessment of Foreign Participation in the United States Telecommunications Sector, an interagency body more frequently referred to as “Team Telecom” (the name it was called before its informal predecessor was formally established during the first Trump administration). When foreign parties apply for certain US telecommunications licenses or to acquire current holders of such licenses, the FCC, as part of its public interest assessment, can refer the application to Team Telecom for a review of national security and law enforcement considerations. Team Telecom reviews can often lead to risk mitigation conditions memorialized in a National Security Agreement or, as in this case, an LOA.
The FCC-Marlink consent decree has attracted most of its attention because it is the first time the FCC has taken an enforcement action for violation of Team Telecom-recommended mitigation conditions. The enforcement action itself was relatively light—Marlink has to implement a more robust access screening plan, provide regular compliance reports, and pay a “voluntary contribution” to the US government of US$175,000 (i.e., less than US$1,000 per failure to screen)—but at least puts future parties on notice that the FCC and Team Telecom will seek to enforce their mitigation agreements.
Arguably, the bigger lesson from the Marlink case may be the fact that Team Telecom reviewed the P8 acquisition to begin with and that DOJ then sought the Marlink LOA. Because P8 is ultimately controlled by US-based Providence (with a top-level general partner entity whose six members included five US citizens and one French citizen), one would think P8’s acquisition, by reducing Apax’s ownership of Marlink to only 35 percent, would not have introduced the types of foreign ownership concerns that typically cause the FCC to refer cases to Team Telecom.
Since the LOA required commitments from only Marlink and P8, it is less likely that Apax’s 35-percent interest in Marlink afforded Apax any material governance or information access rights with respect to Marlink and more likely that the Team Telecom process related to P8 itself or other non-US investors in the P8 fund structure.
This highlights two differences between the rules governing Team Telecom and those governing CFIUS. Under CFIUS’s regulations:
In contrast, the FCC’s Team Telecom regulations do not exclude either of these scenarios from potential Team Telecom referrals. Thus, parties considering the use of non-US investment vehicles or the direct or indirect participation of non-US investors in US telecom transactions within the scope of Team Telecom should clarify in advance whether a Team Telecom review may be required even if a CFIUS review is not.
Authors:
Jonathan Gafni, Bhavishya Barbhaya