U.S. LED lighting maker Cree announced on Thursday it would terminate a $850-million deal to sell its Wolfspeed division, which makes chips used in charging technology for electric cars, to German chipmaker Infineon.
Cree and Infineon were unable to identify alternatives which would address the national security concerns raised by the U.S. government, Cree said in a press release, adding that Infineon will pay a termination fee of $12.5 million.
“We are disappointed that the Wolfspeed sale to Infineon could not be completed,” said Chuck Swoboda, Cree chairman and chief executive. “In light of this development, we are going to shift our focus back to growing the Wolfspeed business.”
Infineon had hoped to secure technical expertise through the takeover of Wolfspeed. The U.S. rival employs 500 people and would have contributed €200 million or $213 million to sales.
Only two weeks ago, Infineon CEO Reinhard Ploss said that the plans were on track and that he expected to get the green light from the authorities this quarter.
But the Committee on Foreign Investment in the United States, or CFIUS, a U.S. government body that reviews plans for foreign investment to determine whether there are any risks to national security, unexpectedly opposed the deal. Infineon announced on Wednesday night that the committee had informed the companies that the planned purchase constituted a risk to national security. Off the record, sources have said that the veto came completely out of the blue.
Infineon, a former subsidiary of German technology giant Siemens, planned to pay $850 million for its competitor. When the Munich-based group announced the deal in summer 2016, it said that the two companies would complement each other.