US President Donald Trump has ordered the divestment of a $2.9 million semiconductor deal, arguing that continued ownership of the technology poses a threat to US national security. The decision, announced on Friday through an executive order, requires the current owner, HieFo Corp., to unwind the transaction within 180 days.
The order brings renewed scrutiny to a deal that attracted little attention when it was finalized in May 2024 under the previous US administration. At the time, aerospace and defense-focused Emcore Corp. agreed to sell its computer chip and wafer fabrication operations to HieFo for approximately $2.92 million, a figure that included the assumption of roughly $1 million in liabilities.
National security concerns drive forced divestment
According to the executive order, the administration has identified “credible evidence” that HieFo’s ownership structure represents a national security concern, citing that the company’s current owner is a citizen of the People’s Republic of China. On that basis, the White House concluded that allowing HieFo to retain control of the semiconductor technology would be inconsistent with US security interests.
As a result, HieFo has been instructed to divest the assets within six months, although no details were provided regarding potential buyers or whether the transaction could be restructured to comply with US regulations.
Background on the Emcore–HieFo deal
HieFo was founded by Dr. Genzao Zhang and Harry Moore. Prior to the acquisition, Zhang served as vice president of engineering at Emcore before taking on the role of chief executive officer at HieFo. Following the completion of the deal, the company stated that operations would continue to be overseen by largely the same team of employees based in Alhambra, California.
At the time, Zhang said the acquired technology would support the development of innovative and disruptive solutions, including applications linked to artificial intelligence. HieFo did not immediately respond to requests for comment following the announcement of the divestment order.
Broader implications for US chip policy
Emcore was publicly listed when the transaction was announced but was taken private last year by investment firm Charlesbank Capital Partners. The forced divestment highlights the increasingly strict stance of the US government toward semiconductor-related transactions involving foreign ownership, particularly where China-linked interests are involved.
The move underscores Washington’s broader effort to safeguard critical technologies and reflects a continued tightening of oversight around chips and advanced manufacturing, a trend that remains a key theme for markets and corporate dealmaking in 2026.
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