Obama blocks sale of Sunnyvale semiconductor firm to China-linked firm

President Barack Obama has rejected the proposed sale of Sunnyvale semiconductor firm Aixtron to a China-linked firm over national security concerns.

China yesterday issued an official complaint and called into question Obama's motives.

The company trying to buy Aixtron and its German parent firm Aixtron SE for $714 million is owned by Chinese investors with links to Chinese state enterprises, the US Department of the Treasury said in a news release Friday.

The department added that Obama and the federal inter-agency Committee on Foreign Investment in the US concluded that the America's security  would be threatened by the sale to Fujian Grand Chip.

According to the department, Aixtron's technology had military applications.

According to Joel Espelien, senior analyst with TDG Research, the possibility of  potential military uses of particular semiconductor technologies could be determined by whether they could produce chips capable of ultra-high performance or which could withstand extremely severe environments.

According to the treasury department, the president could veto acquisitions when there was ''credible evidence that the foreign interest exercising control might take action that threatens to impair national security.'' 

Espelien added that while the move could be seen as a blunt-force approach to the problem of protecting the US from technological threats, it was about the only tool available for policing such a fast-moving sector.

Meanwhile, Lu Kang a, Chinese foreign ministry spokesman said the proposed acquisition of Aixtron SE by China's Fujian Grand Chip was ''pure market behavior.''

''We hope that the United States will cease making groundless accusations about Chinese companies and will provide a fair environment and favorable conditions for investment by them,'' said Lu at a regular briefing. ''I think this matter will in the long run be in the interests of all the parties concerned.''