US President Donald Trump issued an executive order canceling a $2.9 million business deal that aimed to sell advanced computer chips to a Chinese entity, justifying his decision by saying that this deal poses a direct threat to the security interests of the United States if the current owning company continues to control this sensitive technology.
This decision brings renewed attention to a thorny issue concerning a deal that received little media coverage when it was first announced in May 2024, during the administration of former President Joe Biden. The deal involves an aerospace and defense company selling its chip manufacturing operations to a Chinese firm for $2.92 million, a sum that includes $1 million in financial obligations for the buyer.
Deadline for abandoning technology
Under the new presidential order, Trump demanded that the Chinese company immediately divest itself of this technology and related assets within 180 days. The decision was based on what the White House described as "credible evidence" confirming that the current owner of the acquiring company is a citizen of the People's Republic of China, raising serious concerns about the transfer of sophisticated American technology to Beijing.
Context of the raging chip war
This decision cannot be viewed in isolation from the broader context of the escalating technological conflict between Washington and Beijing, often referred to as the "chip war." For years, the United States has pursued strict policies to restrict China's access to advanced semiconductors and their manufacturing equipment, fearing their use in developing Chinese military or intelligence capabilities. Semiconductors are now considered the "new oil" of the global economy, being used in everything from smartphones to guided missile systems.
The importance of national security in the space sector
This particular deal is especially sensitive given the nature of the selling company's work in the aerospace and defense sector. The technology used in this sector is often "dual-use," meaning it may appear commercial on the surface but has vital military applications. The US administration fears that acquisitions by Chinese companies—even through relatively small deals—could lead to the transfer of intellectual property and technological know-how, potentially harming US military superiority in the future.
Continuation of technological protectionist policies
This action underscores that protecting American technology remains a top priority across successive administrations, both Democratic and Republican. The Committee on Foreign Investment in the United States (CFIUS) plays a pivotal role in reviewing such deals, possessing broad authority to recommend blocking or dissolving any foreign investment deemed to threaten national security. This reflects the ongoing American trend toward tightening controls on the flow of technology to strategic competitors.
