Yuichiro Chino

White House Announces New Restrictions on Foreign Investment in US Tech, Supply Lines

Administration will require investments to be weighed on whether they will put U.S. national security at risk.

More foreign investments in U.S. companies will require federal approval under a new executive order intended to bar transactions that might allow potential adversaries control of crucial American supply chains or sensitive technology, the White House announced on Thursday.

The order adds specific guidelines and additional focus to the reviews already performed by the Committee on Foreign Investment in the United States, or CFIUS, three senior administration officials said in a call with reporters on the condition they not be identified. 

”Some countries use foreign investment to obtain access to sensitive data and technologies for purposes that are detrimental to U.S. national security,” the White House said in a background statement on the order. 

The order focuses on transactions in specific sectors, such as microelectronics, but could apply to any transaction where it’s determined that sensitive data, technologies or supply chains could be impacted and it allows the president to retroactively order divestment of a previously completed transaction if an issue is found, the White House said. 

While the order does not name China or Russia, “it's going to matter where investments are coming from and who the investors are,” said one of the senior administration officials.

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 follow up questions from Defense One. 

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. 

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. 

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.