Bush Approves Sale of Key Chip Firm to Japanese : Semiconductors: The deal is small, but the company is a crucial supplier. The deal could still be overturned by the Justice Department.
President Bush has decided not to block a Japanese firm’s planned purchase of a major American semiconductor supply firm, the White House announced Friday.
Bush’s approval of the sale of Semi-Gas Systems of San Jose to Nippon Sanso of Tokyo came despite objections from several Democratic lawmakers and Sematech, the government-supported microchip technology venture. They argued that it would hand over an important high-tech venture to a Japanese competitor.
The $23-million deal could still be blocked by the Justice Department, which is reviewing it on antitrust grounds. The department is examining whether the combined firm, which would control about 65% of the U.S. market for gas delivery systems used in computer-chip manufacturing, would have a monopoly share of the market. Semi-Gas alone controls about 46% of the market.
Opponents of the sale, while holding out some hope the Justice Department might object, conceded that the deal is likely to go through.
Semi-Gas is owned by Hercules Corp. of Wilmington, Del., which rejected a lesser $15-million buyout offer from Semi-Gas’ management to accept the more attractive Nippon Sanso bid.
Leading U.S. industry officials and several Democratic lawmakers, including House Majority Leader Richard Gephardt of Missouri, have been sounding alarms recently about the accelerating transfer of critical U.S.-owned suppliers at a time when many American high-technology industries are trying to hold or regain global market leadership in the face of strong foreign competitors.
“The sale of Semi-Gas to anybody other than an American-owned firm would be a national disaster and jeopardize our economic sovereignty in this vital industry,” said Rep. Mel Levine (D-Los Angeles), co-chairman of the House Hi-Technology Caucus. “America is the only country in the world that would give away its crown technology jewels so freely.”
Bush, in deciding not to block the sale, followed the recommendation earlier this month of the Administration’s interagency Committee on Foreign Investment in the United States (CFIUS).
Out of roughly 400 transactions recommended for review, the interagency CFIUS group has examined about 10 and has blocked only one--the sale of a Seattle-based firm to a Chinese government-owned defense-procurement company.
“They throw more shutouts than Nolan Ryan,” complained Mark Nelson, director of government affairs for Sematech, the government-business consortium that is trying to develop new chip-making technology for U.S. firms.
Sematech, which relies on Semi-Gas to supply critical gas delivery systems for its operations in Austin, Tex., said that it would have to find a new supplier if Semi-Gas is taken over by Nippon Sanso.
“Our fear is that confidential Sematech information will be transferred to our competitors in Japan,” said Nelson. “Finding another gas team could cost millions of dollars and set us back six months.”
But Administration officials disputed Sematech’s claim. They said they found no threat to national security in the acquisition of Semi-Gas by Nippon Sanso. A U.S. official said there is no reason for Sematech to drop Semi-Gas’ team of five experts because Nippon Sanso has agreed to protect the confidentiality of its Sematech operations.
In general, Administration officials contend, foreign firms willing to pay top dollar are usually in as good a position to advance technology developed by small U.S. firms as their previous owners.
In the case of Semi-Gas, one Administration official said, Nippon Sanso is expected to improve the technology available to U.S. semiconductor firms by helping Semi-Gas produce “cleaner gas for making better chips with fewer defects, all on U.S. soil under the protection of U.S. laws.”
Under the Exon-Florio law, the President is authorized “to investigate and, if necessary, to prohibit or suspend a foreign acquisition of a U.S. business.”
The White House, in announcing Bush’s decision, said he did not find “credible evidence that leads him to believe that the foreign investor might take action that threatens to impair national security.” It added that there was no evidence existing laws “do not provide adequate and appropriate authority to protect national security.”
Staff Writer James Gerstenzang, in Kennebunkport, Me., contributed to this story.
