Critics Still Hope to Block Semi-Gas Sale

The proposed sale of Semi-Gas Systems of San Jose, a key supplier for U.S. semiconductor makers, to a Japanese competitor may be blocked despite a federal agency’s recommendation that the transaction be allowed, opponents of the sale said Thursday.

“I don’t think it’s a dead issue yet, and maybe there are a few reasons to be optimistic,” said one executive of Semi-Gas, which makes gas delivery systems that are a critical part of the computer chip-making process.

Semi-Gas is owned by Hercules Corp. of Wilmington, Del. Nippon-Sanso, a leading gas supplier to Japanese chip makers, offered Hercules $23 million for Semi-Gas and intends to merge it with its other U.S. gas-handling operation, Matheson Gas Products of Secaucus, N.J.

The few hopes to block the sale are concentrated on the continuing review by the antitrust division of the Justice Department, which could prevent the deal by ruling that the newly combined company would have a monopolistic share of the market.

Opponents, however, are more generally concerned about the accelerating loss of critical U.S.-owned suppliers at a time when the semiconductor industry is trying to regain market leadership.

The antitrust review was left as the sole impediment to the sale when the interagency Committee on Foreign Investment in the United States recommended last week that President Bush not intervene to stop it. Bush must accept the committee’s recommendation or reject it--an event insiders consider highly unlikely in the face of ongoing global trade negotiations--before the end of the month.

The CFIUS recommendation came as a disappointment, but not a surprise, to opponents. “We raised a lot of hell about it. . . . We’re happy with the attention but can’t say we’re happy with the outcome to date,” said Miller Bonner, spokesman for Sematech.