On April 30, 2024, EMCORE Corporation, a U.S.-based company that makes advanced inertial navigation products serving the aerospace, defense, and commercial markets, sold its digital chips and indium phosphide wafer design, fabrication, and processing businesses to HieFo Corporation. Public information describes HieFo (short for High Efficiency Photonics) as a U.S.-based company specializing in the design and manufacture of indium phosphide (InP) chips used in telecommunications, data center connectivity, sensing, and AI networking. According to its website, HieFo began with a management buyout of wafer fabrication and chip-related assets from EMCORE Corporation. A HieFo press release states the transaction included the transfer of equipment, contracts, intellectual property, and inventory from EMCORE’s facility in Alhambra, California. By acquiring these assets and rehiring key scientists, engineers, and operators, HieFo reported that it inherited over 40 years of optoelectronic innovation in InP chip design and manufacturing as an integrated device manufacturer (IDM).
On January 2, 2026, the White House issued an Executive Order forcing the unwinding of this transaction. The Committee on Foreign Investment in the United States (CFIUS) chaired by the Secretary of the Treasury conducted a review of the April 2024 sale, and HieFo Corporation was unable to resolve national security concerns CFIUS identified relating to the ownership and control of HieFo Corporation, resulting in the Executive Order.
The Treasury Department stated that “CFIUS identified a national security risk arising from the transaction relating to potential access to EMCORE’s intellectual property, proprietary know-how, and expertise and to the potential diversion of supply of indium phosphide chips manufactured by the EMCORE Digital Chips Business away from the United States.”
While acknowledging HieFo is organized under the laws of Delaware, the Executive Order stated that HieFo was “controlled by a citizen of the People’s Republic of China.”
The Executive Order, among other things:
Notably, this transaction involved an acquisition of assets in the United States by a U.S. company. Under CFIUS rules, a U.S. company also can be viewed as a foreign entity if controlled by a foreign person. In this case, where HieFo reportedly was formed through a management buyout to acquire the EMCORE assets, it appears that CFIUS looked through HieFo’s ownership and leadership to identify an individual with Chinese nationality in a controlling position. This highlights the importance of diligence on the ownership and control of an acquiring company to identify foreign interests and of supporting that diligence with appropriate representations in deal documents, especially when the target company is involved in sensitive technology sectors such as semiconductors and sensors.
Another notable factor, according to the U.S. Treasury Department’s statement, is that HieFo did not submit the transaction for CFIUS review until after CFIUS’s non-notified team investigated the transaction. CFIUS’s non-notified function has been enhanced by increased resources to identify and review non-notified transactions. CFIUS has the authority to initiate reviews of non-notified transactions where a foreign party acquires a controlling interest in any U.S. business, even if the target company’s underlying technology is not export controlled at a level that could mandate a CFIUS review. In M&A transactions, where assets will transfer to a party that is foreign or ultimately owned or controlled by foreign persons, the parties should consider whether to pursue a CFIUS filing and evaluate the risks of foregoing such a filing based on the parties, nationalities, technologies, and other risk factors involved. In this case, where the acquisition was valued at only $2.9M, the relatively small size of the transaction was not an offset to mitigate the risk CFIUS identified.
Any acquisitions of U.S. assets by foreign entities or by U.S. companies with ultimate foreign ownership or control should be reviewed with the assistance of counsel to determine whether the transaction may be subject to CFIUS jurisdiction and to identify potential considerations under U.S. national security policy. In situations where the acquiring entity has one or more founders with citizenship from a country of concern under U.S. policy (such as China), and where the target company is involved in the semiconductor industry or other sensitive industries, proactive disclosure to CFIUS with a mitigation plan in hand may be prudent.