Investing in U.S. semiconductor sector companies has become an increasingly challenging task for Chinese investors as the interagency Committee on Foreign Investment in the United States—better known as CFIUS—has increased its scrutiny of these deals. In the last few weeks alone, CFIUS concerns served to scuttle several potential transactions, forcing Chinese investors and U.S. companies to re-evaluate the potential impact of national security issues on getting the deal done.

Fairchild Semiconductor International Inc. recently rejected a topping bid from a consortium consisting of China Resources Microelectronics Ltd., a state-owned company, and Hua Capital Management Co., Ltd., a China-based investment fund, citing concerns over its ability to obtain CFIUS approval, among other factors. In comparison with the deal Fairchild had signed with an American acquirer, Fairchild deemed the higher China Resources offer too uncertain and the proposed $108 million CFIUS reverse termination fee insufficient to justify proceeding with the higher offer.

Originally published in The M&A Journal, Volume 16, Number 5 on April 17, 2016.