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In March, Chinese private equity firm Wise Road
Capital agreed to acquire system chip manufacturer Magnachip in
a deal valued at $1.4 billion.
Since then, regulatory authorities in countries including the
United States and South Korea have been reviewing the deal.
Magnachip, which produces display and power chips, has
production and R&D facilities based in South Korea.
Magnachip said in a SEC filing on Monday the U.S. Department of
Treasury, in a letter to the company's legal counsel last
Friday, said the acquisition posed "risks to the national
security of the United States," and expects to seek President
Joe Biden's decision on the matter.
CFIUS, a committee under the U.S. Department of Treasury, had
ordered the deal to be put on hold in June.
The filing to the U.S. Securities and Exchange Commission did
not specify the nature of the risks.
Magnachip was assessing its next steps, but cannot give
assurance that it would agree to proposals that would facilitate
clearance by CFIUS, the filing said. A spokesperson for
Magnachip declined further comment.
A global shortage of chips has slowed production in the
automobile and tech industries, fuelling calls for the United
States to rely less on China and leading to efforts such as the
U.S. Senate passing the "U.S. Innovation and Competition Act"
which authorised about $190 billion for provisions to strengthen
U.S. technology and research.
(Reporting by Joyce Lee; Editing by Jacqueline Wong)
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