US President Donald Trump has blocked a transaction involving American semiconductor assets and a company linked to China, citing concerns that the deal could pose a threat to US national security.

In an executive order issued on Friday, Trump prohibited HieFo Corporation from acquiring certain chip-related assets of New Jersey-based Emcore Corporation. The order stated there was “credible evidence” indicating that the transaction could impair the national security of the United States.

HieFo, a Delaware-registered company controlled by a Chinese national, had completed the acquisition on April 30, 2024. The deal involved assets related to digital chips, as well as wafer design, fabrication, and processing operations previously owned by Emcore. These assets were part of Emcore’s discontinued chips business.

According to the executive order, existing legal authorities — excluding Section 721 of the Defense Production Act of 1950 — were deemed insufficient to address the national security risks associated with the transaction. As a result, Trump exercised executive authority to block the deal and mandate divestment.

Under the order, HieFo is barred from holding any ownership interest or rights in the Emcore assets, either directly or indirectly. The company and its affiliates have been instructed to divest all such interests within 180 calendar days, unless the Committee on Foreign Investment in the United States (CFIUS) grants an extension.

Until the divestment is completed and verified by CFIUS, HieFo is prohibited from accessing the Emcore assets. This restriction includes non-public technical data, information technology systems, products, components, equipment, books, and corporate records. Any access would require prior written authorization from CFIUS.

The order also authorises CFIUS to impose compliance measures, require regular certifications, and conduct audits to ensure adherence. HieFo must submit periodic written statements confirming compliance and detailing progress toward full divestment.

Emcore had earlier disclosed that it agreed to sell its chips business and indium phosphide wafer fabrication operations for approximately $2.92 million. The transaction included HieFo’s assumption of certain liabilities and covered substantially all assets associated with Emcore’s former chips operations, including facilities located in Alhambra, California.

CFIUS, an interagency body chaired by the US Treasury Department, reviews foreign investments for potential national security risks. Its oversight has expanded significantly in recent years, particularly in sectors involving advanced technologies.

Semiconductors are considered critical to both civilian and defense applications, and successive US administrations have tightened scrutiny of foreign involvement in the industry. The move reflects Washington’s broader effort to limit foreign — especially Chinese-linked — access to sensitive chip technologies amid intensifying strategic competition between the two countries.