New restrictions on foreign investment in the US Technology and supply lines announced by the White House

New restrictions on foreign investment in the US Technology and supply lines announced by the White House

News Summary:

  • “Some countries use foreign investment to gain access to sensitive data and technology for purposes that are detrimental to the national security of the United States,” the White House said in a basic statement on the order. This order focuses on transactions in specific areas, such as microelectronics, but can apply to any transaction where it is determined that sensitive data, technology, or the supply chain could be affected, and it allows the president to retroactively order the divestment of a previously completed transaction if a problem is found, the White House said.

  • The White House says more foreign investment in US companies will require federal approval under a new executive order that bans transactions that could allow potential rivals control of key supply chains. important US or sensitive technology, the White House said on Thursday. The order adds specific guidance and additional attention to reviews already conducted by the Committee on Foreign Investment in the United States, or CFIUS, three senior administration officials said in a call with reporters on condition of not being identified.

Although the order did not name China or Russia, “where the investments come from and who the investors are will be very important,” one of the senior administration officials said. One of the biggest concerns continues to be access to sensitive data, such as medical information or biological data, and the order seeks to prevent foreign firms from obtaining personal data on U.S. citizens that could be exploited, such as obtaining personal data on a hotel chain`s guests, administration officials said on background in response to following up questions from Defense One.

Under the order, foreign transactions involving microelectronics, artificial intelligence, biotechnology, quantum computing, advanced clean energy, climate adaptation technologies, and food security, or involving critical minerals, manufacturing, or technology in those fields should be reviewed for whether the investment “could reasonably result in future advancements and applications in technology that could undermine national security, and whether a foreign person involved in the transaction has ties to third parties that may pose a threat to U.S. national security,” the statement said.

Even if the data managed by a company is anonymized, “advances in technology, combined with access to large data sets, increasingly enable the re-identification or de-anonymization of what once was unidentifiable data,” the White House said in its statement on the order.

CIFUS will also be directed to look at whether the investment is one of several by a foreign entity in a sector to avoid any area of sensitive U.S. commerce being too dominated by a foreign interest. “There may be a comparatively low threat associated with a foreign company or country acquiring a single firm in a sector, but a much higher threat associated with a foreign company or country acquiring multiple firms within the sector,” the White House said in its statement.

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