CFIUS Blocks Chinese Fund’s $580M Merger With US Semiconductor Maker Xcerra

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American semiconductor and electronics manufacturer Xcerra Corporation and China’s Hubei Xinyan Equity Investment Partnership have cancelled their proposed merger after failing to receive approval from the Committee on Foreign Investment in the United States (CFIUS), the companies announced today.

Xinyan Equity Investment is a buy-out investment fund whose biggest investor is China’s Unic Capital Management Co., Ltd., a capital and asset management firm which makes long-term investments in semiconductor and other advanced technology industries.

It marks the latest blocked Chinese acquisition of a U.S. asset due to a toughened CFIUS stance. Last month, Ant Financial Services Group and MoneyGram announced that they have mutually agree to terminate their merger deal.

Under President Trump’s administration, CFIUS has increased its scrutiny of Chinese acquisitions of US firms, especially in critical high-tech sectors such as artificial intelligence, robotics and aerospace. The most high-profile case includes Donald Trump blocking Chinese state-backed Canyon Bridge Capital Partners’ planned $1.3 billion acquisition of Lattice Semiconductor Corp last year.

Xcerra’s stockholders approved the merger with Xinyan Equity Investment last October. Xinyan agreed to acquire Xcerra for $10.25 per share. Last April, Xcerra announced it would be acquired by Unic Capital and affiliate of Sino IC Capital, a Chinese fund focusing on investments in semiconductor and related industries, for US$580 million.

“Our transaction with Xinyan was about enabling Xcerra to accelerate its growth in the China market as well as broadening and strengthening our customer relationships around the world," said Dave Tacelli, president and CEO of Xcerra Corporation, "While we are disappointed that we were not able to receive approval from CFIUS on this transaction, Xcerra and Xinyan are discussing alternatives to pursue opportunities in new and existing markets in China.”

Xcerra Corporation is comprised of four brands in the semiconductor and electronics manufacturing test markets. The company booked net sales of US$121 million and net income of US$17.1 million for the first three quarters last year.

It appears only small deals in more general sectors are getting done in the U.S. by Chinese buyers. Chinese state-owned semiconductor manufacturing supplier Naura Microelectronics Equipment Co., Ltd gained approval from CFUIS to acquire U.S. company Akrion Systems LLC, a supplier of surface preparation for solar and semiconductor devices, for US$15 million.

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