President Donald Trump has blocked a $2.9 million chip deal between HieFo and Emcore over China-linked national security concerns, ordering the Chinese-controlled buyer to unwind the acquisition of key chip assets. The transaction centered on Emcore’s Velocity One navigation gyro technology, which Trump and his advisers concluded could pose security risks if controlled by a firm with ties to China. The move underscores how semiconductor mergers are facing heightened scrutiny amid ongoing U.S.-China tensions over advanced technology and supply chains.
Background of the HieFo-Emcore Deal
The blocked transaction involved a proposed $2.9 million acquisition in which HieFo, described in U.S. government documents as a Chinese-controlled firm, sought to purchase specific chip assets from Emcore, including the Velocity One navigation gyro. According to reporting on the decision to halt the merger, the deal was initially framed as a relatively small, roughly $3 million asset sale that would transfer specialized navigation-related semiconductor technology from Emcore to HieFo, with the parties treating it as a straightforward commercial transaction before it drew national security scrutiny. Coverage of the decision notes that the value of the deal was cited as both $3 million and $2.9 million, with one account describing how Trump blocked a $3 million chip deal over China security concerns while another characterized it as a $2.9 million HieFo-Emcore chip deal.
At the heart of the proposed sale were chip assets used in navigation technology, including Emcore’s Velocity One navigation gyro, which is designed to provide precise orientation and motion data that can be integrated into guidance systems. Reporting on the blocked merger explains that the Velocity One navigation gyro was specifically identified in U.S. government reviews as a sensitive technology, because navigation gyros can be incorporated into aerospace, defense, and advanced industrial platforms where accuracy and reliability are critical to performance and security. One detailed account of the transaction notes that Trump ultimately moved to stop what it called the $2.9 million HieFo-Emcore chip deal over China-linked national security concerns, signaling that even relatively modest asset transfers in this niche can trigger intervention when they touch on navigation and guidance capabilities.
Trump’s Order to Unwind the Transaction
President Trump issued a directive on January 3, 2026, to block the chipmaker merger and mandate that HieFo unwind the acquisition of Emcore’s chip assets, including the Velocity One navigation gyro. The decision was described as an order to a Chinese-controlled firm to reverse its purchase of chip assets, with the president instructing that any rights or interests HieFo had obtained in the transaction be divested and that the assets be returned to a structure acceptable to U.S. authorities. One account of the decision explains that Trump ordered the unwind of the Chinese chip acquisition involving Emcore, HieFo, and the Emcore Velocity One navigation gyro, underscoring that the action went beyond a simple block of future integration and required an active reversal of steps already taken.
The executive action relied on national security authorities that allow the president to intervene in foreign acquisitions of U.S. businesses or assets when they are deemed to threaten U.S. security interests, a framework that has been used in other technology and semiconductor cases involving Chinese buyers. Reporting on the move notes that Trump used these powers to halt the HieFo-Emcore integration and to prevent HieFo from exercising control over the chip assets, effectively freezing the deal and compelling divestiture of the Velocity One navigation gyro and related technology. In describing the scope of the order, one account states that Trump blocked the chipmaker merger, citing national security risk tied to HieFo and Emcore’s China-related connections, which signals to companies and investors that even completed or near-completed deals can be unwound when they intersect with sensitive technologies.
Cited National Security Risks
Officials advising President Trump flagged the HieFo-Emcore deal for potential security vulnerabilities rooted in the Chinese control of the acquiring firm and the nature of the semiconductor technology at stake. The Velocity One navigation gyro and associated chip assets were viewed as strategically important because navigation gyros can be integrated into systems that support military platforms, critical infrastructure, and advanced industrial equipment, where unauthorized access or replication could erode U.S. advantages. One detailed account of the decision reports that Trump blocked the chips deal and cited security and China-related concerns, indicating that the administration saw a direct link between the ownership structure of HieFo and the risk that sensitive navigation technology could be transferred to or influenced by entities aligned with Beijing.
Concerns about Chinese control of Emcore’s chip assets extended beyond the immediate buyer to the broader ecosystem of Chinese semiconductor and defense-linked firms that could benefit from access to the Velocity One navigation gyro technology. Analysts quoted in coverage of the decision argued that allowing a Chinese-controlled firm to own and potentially modify or replicate such navigation components could facilitate technology transfer to adversarial entities, particularly if the gyro technology were adapted for use in missiles, unmanned systems, or precision-guided munitions. In that context, the move to block and unwind the HieFo-Emcore deal was framed as part of a broader effort to prevent sensitive semiconductor and navigation technologies from being absorbed into China’s industrial and military base, reinforcing a pattern in which U.S. authorities treat even small-dollar chip transactions as strategically significant when they involve Chinese buyers and dual-use capabilities.
Implications for U.S. Chip Industry Stakeholders
For Emcore, the order to unwind the $2.9 million transaction means reversing an asset sale that had been expected to generate cash and streamline its portfolio, potentially forcing the company to reassess its financial and strategic plans. Reporting on the decision notes that Emcore must now disentangle any operational integration that may have begun around the Velocity One navigation gyro and related chip assets, and may need to seek alternative buyers that satisfy U.S. national security reviews or reinvest in the technology internally. One account of the intervention explains that Trump blocked the $3 million chip deal over China security concerns, a move that not only affects Emcore’s immediate balance sheet but also sends a signal to other U.S. chipmakers that asset sales involving navigation or other sensitive technologies will face intense scrutiny when Chinese-controlled firms are involved.
The impact on HieFo and other Chinese firms is even more direct, as the order underscores that U.S. authorities are willing to unwind completed or near-completed deals and to bar Chinese-controlled buyers from acquiring even relatively small chip assets that touch on strategic technologies. Analysts cited in coverage of the decision argue that the HieFo case will likely deter some Chinese firms from pursuing U.S. semiconductor acquisitions, or at least push them to structure deals in ways that attempt to mitigate national security concerns, such as through minority stakes or partnerships that avoid direct control of sensitive assets. One detailed report on the blocked merger notes that Trump blocked the chipmaker merger, citing national security risk tied to HieFo and Emcore’s China-related connections, which industry observers interpret as part of a broader tightening of U.S. barriers to Chinese investment in chips, particularly in areas like navigation, communications, and advanced manufacturing where dual-use applications are evident.
Wider Regulatory and Geopolitical Fallout
The decision to halt the HieFo-Emcore deal fits into a pattern of heightened regulatory reviews for semiconductor mergers that involve China-linked national security concerns, reinforcing a message that even modest transactions will be examined through a strategic lens. Analysts following the case point out that the blocked $2.9 million asset sale is small compared with multibillion-dollar chip mergers, yet it still triggered a presidential order, which suggests that U.S. authorities are prioritizing the sensitivity of the technology over the size of the deal. One account of the intervention describes how Trump blocked the $2.9 million HieFo-Emcore chip deal over China-linked national security concerns, a decision that industry lawyers say will likely prompt companies to build national security assessments into their deal planning from the outset, particularly when navigation, aerospace, or communications chips are involved.
Geopolitically, the move adds another point of friction in U.S.-China relations over technology, as Beijing has repeatedly criticized U.S. efforts to restrict Chinese access to advanced chips and manufacturing tools as discriminatory and protectionist. While the HieFo-Emcore case involves a relatively narrow set of navigation gyro assets, Chinese officials and state-linked commentators are likely to view it as part of a broader campaign to contain China’s technological rise, alongside export controls on advanced lithography equipment and restrictions on high-end AI chips. One detailed account of the decision notes that Trump blocked the chips deal and cited security and China-related concerns, a framing that underscores how national security arguments are increasingly central to U.S. technology policy and that signals to allies and rivals alike that Washington is prepared to intervene directly in private-sector transactions to protect what it sees as critical semiconductor capabilities.
