Chip maker stuck in US-China trade war

Washington noted earlier that chipmakers would be wiser to pay attention to the spirit of chips & science act than just the text of the law itself.

Experts said that those companies will try to extend the time to wait for new moves by the U.S. government, at least after the November midterm elections.

South Korean semiconductor company Magnachip was reluctant to cancel its $1.4 billion merger proposal with China’s Wise Road Capital.

Prior to the decision last December, Magnachip had no operations related to manufacturing, research and development or sales in the U.S., except for listing on the New York Stock Exchange and having a representative office in Delaware.

But that hasn’t stopped the Committee on Foreign Investment in the U.S. (CFIUS) from intervening in the merger.

“CFIUS has traditionally intervened on fundamental security issues such as ports or infrastructure, but it was quite surprising that they were involved in preventing a takeover of a relatively small company like Magnachip,” said Chris Miller, an associate professor at Tufts University.

“I think this is a really important signal in the entire semiconductor industry.”

Magnachip is seen as an example of how U.S.-China tensions are affecting chipmakers.

They appear increasingly forced to align themselves with the U.S. as it seeks to counter China’s rise as a technological power.

U.S. President Joe Biden in early August signed into law the $280 billion CHIPS & Science Act, including a $52.7 billion package for semiconductor manufacturing and research.

Companies across the globe are also trying to move some of their factories to the U.S., while also weighing investment decisions in China.