Thursday, September 29, 2022

Republican Rubio Slams U.S. Approval of Chip Deal with China Ties

Chip Deal with China Ties

Republican Senator Marco Rubio on Monday blasted U.S. regulatory approval of a bid by chip intellectual property company Alphawave to purchase U.S.-based OpenFive, over alleged national security risks posed by the buyer’s ties to China’s Wise Road Capital.

On Friday, the Toronto and London-based Alphawave, which licenses its technology to chipmakers, said it had received all regulatory clearances, including from the powerful U.S. Committee on Foreign Investment in the United States (CFIUS).

The $210 million deal is expected to close next month.

The deal has drawn fire from Republican China hawks in Congress, including the influential Rubio, who has advocated for CFIUS to review deals related to China that he saw as posing national security risks.

Earlier this year, he called on CFIUS to scrutinize the Alphawave deal, citing Chinese private equity firm Wise Road Capital’s 10 percent stake in Alphawave and their 2021 agreement allowing Wise Road Capital to license Alphawave technology to increase its customer base in China.

Rubio on Monday accused President Joe Biden’s administration of “yet again” demonstrating its “total unwillingness” to take seriously the threat of China aggressively buying and stealing U.S. intellectual property. “American competitiveness will suffer in the long term as a result,” he warned.

The Treasury department, which heads CFIUS, OpenFive and Wise Road Capital did not respond to requests for comment. Alphawave declined to comment.

Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said China opposes attempts to politicize or interfere politically in mergers and acquisitions.

“Some U.S. politicians are … accusing China of “stealing” intellectual property rights but are short on delivering solid evidence,” Liu added.

CFIUS has taken a hard line with Wise Road Capital in the past. In December 2021, the private equity firm and U.S. chipmaker Magnachip Semiconductor Corp said they had terminated their $1.4 billion merger agreement after CFIUS said the deal posed “risks to national security.”

OpenFive also leases chipmaking intellectual property to chipmakers.


WASHINGTON (Reuters)

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