Statement on the President’s Decision Ordering the Divestment of Interests in Certain Assets of EMCORE Corporation by HieFo Corporation

CFIUS (the Committee on Foreign Investment in the United States) is an inter‑agency U.S. government committee, chaired by the Treasury Department, that reviews certain foreign investments and real‑estate transactions in the U.S. for national security risks. Its authority comes from Section 721 of the Defense Production Act of 1950 (the “Exon‑Florio” provision), as amended. Under Section 721, CFIUS can:

• Review and investigate “covered transactions” (certain mergers, acquisitions, takeovers and other investments by foreign “persons” in U.S. businesses and some real estate) to determine their effect on U.S. national security.
• Negotiate, impose, or enforce mitigation measures on the parties to reduce identified national security risks.
• Recommend that the President block, suspend, or unwind a transaction, or require divestment, if CFIUS finds the risks cannot be mitigated. The President has final authority under Section 721 to suspend, prohibit, or require divestment of a covered transaction when there is credible evidence the foreign acquirer might impair national security and other U.S. laws are inadequate to address the risk.

FIRRMA (the Foreign Investment Risk Review Modernization Act of 2018) significantly expanded CFIUS’s authorities and resources. Key changes, including for non‑notified deals, include:

• Broader jurisdiction: CFIUS can now review certain non‑controlling foreign investments in sensitive U.S. businesses (critical technologies, critical infrastructure, or sensitive personal data), not just deals that give control. It also gained authority over certain real‑estate transactions near sensitive sites.
• Mandatory filings in some cases: For certain high‑risk “critical technology” and foreign‑government‑linked investments, parties must file a short declaration; failure can lead to civil penalties.
• Formal non‑notified program: FIRRMA directed Treasury’s Office of Investment Security to build a centralized process and add staff to identify and call in transactions that were never filed with CFIUS (even years after closing) for possible review and mitigation or divestment.
• More time and tools: It adjusted timelines and created fee authority, and explicitly emphasized monitoring, enforcement, and the ability to reopen cases where mitigation is breached or information was misleading. These changes explain why Treasury’s statement highlights its strengthened “non‑notified” review capabilities in the HieFo–EMCORE case.

Indium phosphide (InP) is a compound semiconductor material used to make very high‑speed, high‑frequency, and optoelectronic chips, especially for fiber‑optic communications and other photonic (light‑based) devices such as lasers, modulators, and photodetectors. Because InP‑based photonic integrated circuits are central to:

• high‑capacity fiber‑optic and subsea cable communications,
• secure military and government communications,
• advanced sensing (like LIDAR) and some directed‑energy and quantum‑information applications, assured access to InP chips and wafers is considered strategically important. U.S. policymakers are increasingly concerned that foreign control over key InP production could:
• divert supply from the U.S. in a crisis,
• expose sensitive communications or systems to disruption, or
• strengthen adversaries’ capabilities in secure communications and advanced weapons. That is why the potential “diversion” of EMCORE’s InP chip output away from the U.S. is framed as a national‑security risk in the CFIUS/Treasury statement.

Under CFIUS rules, a “foreign person” is not just someone incorporated overseas; it includes any person or entity where foreign nationals or foreign governments can exercise control, even if the company itself is organized in a U.S. state like Delaware. Legally (31 C.F.R. §800.224), a foreign person is:

• any foreign national, foreign government, or foreign entity, or
• any entity over which a foreign national, government, or entity has control. In HieFo’s case, public reporting and the presidential order note that HieFo is organized in Delaware but is controlled by a Chinese citizen, so CFIUS treats it as a foreign person for Section 721 purposes. Practically, that means its acquisition of EMCORE’s chip assets is a “covered transaction” subject to CFIUS review and to presidential divestment or other remedies.

Besides ordering full divestment, CFIUS and the President have a range of “mitigation” tools they can impose to address national‑security risks while allowing some or all of a deal to proceed. Common remedies include:

• Limits on access to technology or data: e.g., technology‑control plans, restrictions on foreign engineers’ or managers’ access to certain R&D, source code, or personal‑data systems.
• Governance and security structures: proxy boards, special security agreements, or security officers/directors who are U.S. citizens with clearances; requirements that certain key positions be U.S. persons.
• Operational restrictions: keeping sensitive facilities or equipment in the U.S.; requiring use of U.S.‑based cloud or networks; restrictions on locations of servers or manufacturing.
• Contract and customer protections: preserving or terminating specific U.S. government or defense contracts; ensuring priority supply to U.S. government customers.
• Reporting, audits, and on‑site monitoring: regular compliance reports, third‑party audits, and rights for U.S. agencies to inspect operations.
• Interim or partial divestitures: sale or carve‑out of certain sensitive assets or business lines while allowing other aspects of a transaction to continue. If these measures are not enough to resolve the risk, CFIUS can recommend, and the President can order, suspension, prohibition, or divestment of the transaction.

The public record does not yet spell out detailed employment or operational plans for EMCORE’s digital chips business after the divestment order, so only general effects can be inferred. Typically, in a CFIUS‑driven divestment like this:

• Employees and facility operations: The order requires HieFo to sell the EMCORE Digital Chips Business, including its semiconductor fabrication facility, to an approved buyer within a set period (here, 180 days, subject to extension). During that time, operations often continue under current management to preserve the value of the business, so day‑to‑day work for many employees may initially remain similar, though future staffing can change under the new owner.
• Ongoing contracts and customers: The order usually obligates the seller to maintain the business as a “viable, ongoing concern” and not disrupt contractual obligations more than necessary, so existing customer supply (including any U.S. defense or telecom customers) is typically maintained through the transition. Contracts may later be assigned to the new owner.
• Facility ownership and assets: All relevant real estate, equipment, intellectual property, and inventory related to the chip business must be sold to a non‑prohibited buyer acceptable to CFIUS. The fab and related design and processing capabilities are therefore expected to keep operating under new ownership rather than being shut down, unless the market or the buyer’s strategy dictates otherwise. Without more deal‑specific disclosures, the exact impact on each EMCORE employee or contract cannot be determined from public sources.

In a presidential divestment order under Section 721 (like the HieFo–EMCORE order), typical enforcement mechanics and timelines include:

• Divestment deadline: The order sets a specific period for the foreign buyer to divest all interests in the U.S. assets; here, President Trump’s order gives HieFo 180 calendar days from the date of the order, unless CFIUS extends the deadline.
• CFIUS oversight and approvals: HieFo must notify CFIUS in advance of any intended buyer and obtain CFIUS’s approval that the new owner does not pose national‑security concerns. CFIUS may also impose conditions on the sale.
• Interim restrictions: The order typically bars the foreign owner from accessing sensitive technology or data, transferring intellectual property abroad, or taking actions that would undermine the business pending divestment, and may require interim compliance reporting.
• Enforcement tools: If the company does not comply, CFIUS (and member agencies, such as Justice) can seek injunctions or other relief in U.S. federal court, impose civil penalties for violations of the order or CFIUS regulations, and, in extreme cases, pursue criminal enforcement for willful violations of related laws.
• Finality: Once a compliant divestment is completed and accepted by CFIUS, the specific order is usually considered satisfied, although CFIUS can retain some monitoring obligations if mitigation conditions continue under the new owner.