For more insights and analysis from Cleary lawyers on policy and regulatory developments from a legal perspective, visit What to Expect From a Second Trump Administration.
On January 2, 2026, President Trump issued an order (the “Order”) prohibiting HieFo Corporation (“HieFo”), a Delaware company, from maintaining ownership of digital chip and wafer-related assets (including a semiconductor manufacturing facility) that HieFo acquired from EMCORE Corporation (“EMCORE”). HieFo acquired the assets in April 2024 for $2.92 million, and the Committee on Foreign Investment in the United States (“CFIUS”) subsequently reviewed the transaction.
In connection with its review, CFIUS identified national security risks arising from HieFo’s ownership of the assets. The U.S. Department of Treasury (the “Treasury”) issued a statement explaining that the national security risk related to potential access to EMCORE’s intellectual property, proprietary know-how, and expertise. Treasury also pointed to the potential diversion of supply of indium phosphide chips manufactured by EMCORE away from the United States. Treasury further explained that HieFo had failed to file the transaction with CFIUS proactively, prompting an investigation by CFIUS’s non-notified transactions team, which has the authority to call-in non-notified transactions.
Link to Divestment Requirements Divestment Requirements
The Order requires that HieFo divest all interests in the acquired assets within 180 days, unless this timeframe is extended by CFIUS. Until the divestiture is complete, HieFo (i) cannot grant access to the transaction assets or related non-public technical information, information technology systems, products, parts, and components, books and records, or facilities in the United States to unauthorized persons; (ii) cannot dissolve, restructure, transfer, or otherwise change assets in ways that would impede compliance with the Order; and (iii) must provide weekly certifications to CFIUS confirming adherence to the Order. CFIUS also must approve (or fail to object within a 30-calendar day period) any proposed buyer and is authorized to audit HieFo, inspect its facilities, and impose additional measures as necessary.
Link to Broader Implications Broader Implications
The Order represents the second CFIUS divestiture order under the second Trump administration (the first divestiture ordered is described here). As with the previous divestment order, the Order aligns with President Trump’s America First Investment Policy, which seeks to limit Chinese access to advanced technologies, intellectual property, and strategic industry leverage through targeted investment in U.S. companies. It also reflects the current administration’s increased scrutiny of Chinese involvement in the semiconductor sector, signaling that transactions involving Chinese investors, including those already completed but not previously reviewed by CFIUS, will face substantial regulatory scrutiny. The Order also follows the 2026 National Defense Authorization Act (“NDAA”), which was approved by Congress and subsequently signed into law by President Trump on December 18, 2025. The NDAA introduces several measures related to U.S.-China economic ties, including the Comprehensive Outbound Investment National Security Act of 2025 (“COINS Act”), which effectively codifies, modifies, and ensures funding for the U.S. Outbound Investment Security Program (“OISP”) that went into effect on January 2, 2025. Further details with respect to the OISP can be found in our blog post here. Taken together, the NDAA’s China-related provisions and the Order signal that the Trump Administration remains focused on China, especially activities by Chinese-affiliated entities in sectors CFIUS considers critical to national security.