Analyst says Aixtron sale to Chinese could be revived despite US block

The logo of Aixtron SE is pictured on the roof of the German chip equipment maker's headquarters in Herzogenrath near the western German city of Aachen, October 25, 2016. [Photo/Agencies]

The sale of Aixtron to Chinese investors could go ahead under new terms if the German semiconductor equipment maker sells its Silicon Valley division to get around US objections, an analyst said on Monday.

On Dec 2, US President Barack Obama stopped Fujian Grand Chip Investment Fund (GCI) from buying Aixtron US, the division of the Germany company in California where nearly a fifth of its 713 workforce is based.

The US Treasury Department said the $717 million (670 million euros) deal had been blocked due to national security risks.

Aixtron makes devices which produce crystalline layers based on gallium nitride that are used as semiconductors in weapons systems. The German firm's technology is being used to upgrade both US and foreign-owned Patriot missile defense systems.

Aixtron said, however, the US order "was limited to the United States business and did not prohibit the acquisition of Aixtron shares", causing DZ Bank AG analyst Harald Schnitzer to say that a deal could be revived under revised terms.

"Chinese investors might be willing to take over Aixtron without its US business including US patents and patent applications," he wrote in a client note.

China's foreign ministry called the US decision to block the Aixtron deal it "political obstruction".

Ministry spokesman Lu Kang said China had always supported Chinese firms investing overseas on the basis of market principles, international rules and respecting local laws, adding that the Aixtron deal was purely a commercial matter.

"China resolutely opposes the politicization of any normal commercial takeover or the wrong move of political obstruction," Lu told a news briefing, saying that China hoped the United States would stop making "groundless accusations" against Chinese firms and provide a fair environment for them.

Reuters said Fujian Grand Chip could not immediately be reached for comment.