- with readers working within the Aerospace & Defence industries
On January 2, 2026, President Donald Trump issued an executive order directing HieFo Corporation
(HieFo), a California-based photonics company, to divest its
ownership of EMCORE Corporation's (Emcore) digital chips
business, citing concerns over Chinese control of HieFo. The
presidential decision followed an investigation by the Committee on
Foreign Investment in the United States (CFIUS or the Committee)
that found there was "credible evidence" that HieFo
"might take action that threatens to impair the national
security of the United States."
The order comes almost two years after HieFo's April 2024
acquisition of Emcore's digital chips and related wafer design,
fabrication, and processing businesses, including a semiconductor
manufacturing facility. According to the U.S. Department of the Treasury, HieFo did not
submit the transaction to CFIUS for review until after CFIUS'
"non-notified" team (a group within CFIUS that identifies
transactions that likely are subject to CFIUS jurisdiction but have
not been notified to the Committee by the parties) investigated the
transaction following closing.
Background
Emcore currently develops advanced navigation products for
aerospace and defense, commercial, and industrial clients,
specializing in fiber optic, ring laser gyro, and
micro-electromechanical products. HieFo was founded by Emcore's
former vice president of engineering, Dr. Genzao Zhang, through the
management buyout of Emcore's digital chips business in May
2024. HieFo completed its acquisition of Emcore's chips
business and indium phosphide wafer fabrication operations in
September 2024, which included obtaining Emcore's equipment,
contracts, intellectual property, and inventory, as well as a lease takeover of Emcore's California
facility.
CFIUS' non-notified team cited concerns about access to Emcore's
intellectual property, proprietary know-how, and expertise and
possible diversion of indium phosphide chips "away from the
United States."
CFIUS
CFIUS is an inter-agency body tasked with reviewing foreign
investment in and acquisitions of covered U.S. businesses and real
estate for national security risks under Section 721 of the Defense
Production Act of 1950, as amended (Section 721) (50 U.S.C. 4565).
Where CFIUS has serious concerns about the national security
implications of a transaction it has reviewed, it may recommend the
U.S. president block or otherwise interfere with the transaction,
which is within the president's authority under Section 721.
CFIUS is chaired by the Department of the Treasury and consists of
agency heads from the U.S. Departments of State, Defense, Commerce,
Energy, Homeland Security, and Justice, as well as the White House
Office of Science and Technology Policy and the U.S. Trade
Representative.
Under Section 721, it is mandatory for the parties to certain types
of transactions to inform CFIUS about the deal by filing either a
"declaration" or a "notice." For other
transactions, such a filing is voluntary, but wherever CFIUS has
jurisdiction under Section 721, there is the risk of presidential
action to interfere with the deal. And where a transaction has not
been notified by the parties but has come to CFIUS' attention
through open source reporting, classified reporting, executive
agency referrals, or tips, the Department of the Treasury's
Office of Investment Security may direct the Committee to conduct a
review and require the parties to provide all relevant
information.
Importantly, CFIUS retains authority to review transactions even
after closing. If an unresolvable national security risk is
identified through a CFIUS review of a completed transaction, as
was the case for the HieFo-Emcore transaction, CFIUS may recommend
the president order divesture.
The Executive Order
Under the executive order, effective immediately, HieFo and its
personnel are prohibited from granting any non-HieFo personnel
access to Emcore assets and any "non-public technical
information, information technology systems, products, parts and
components, books and records, or facilities" in the United
States. HieFo has seven days to implement measures to prevent
prohibited access to this information.
The order also bars HieFo from acquiring Emcore assets through
HieFo's partners, subsidiaries, affiliates, and foreign person
shareholders (collectively, Affiliates). U.S. nationals serving on
HieFo's Board of Directors as of November 26, 2025 are exempt
from this prohibition.
The order further requires HieFo and its Affiliates (hereafter
referred to solely as HieFo) to divest all interests and rights in
the Emcore assets, wherever located, within 180 days. This includes
contracts, inventory, tangible property, parts, fixed assets,
accounts receivable, permits, real property leased or owned, and
intellectual property.
HieFo may not transfer any interest in Emcore assets, nor may it
restructure, relocate, transfer, or sell assets in a way that would
"materially impede or prevent" complying with the order.
CFIUS is authorized to audit HieFo to ensure compliance.
HieFo must provide weekly certifications to CFIUS confirming
compliance with the order and detailing its efforts toward
divestment, including the projected timeline for completing all
remaining tasks. HieFo must also make a final certification after
divestment, affirming it has taken "all steps necessary to
fully and permanently effectuate" the order and destroyed or
transferred all intellectual property it possesses and controls,
including copies, related to the Emcore assets.
The order grants CFIUS broad authority to ensure divestment. HieFo
must allow CFIUS-designated U.S. government personnel access to its
premises and facilities in the United States to: (i) inspect and
copy any records and documents related to the order; (ii) inspect
or audit any "information systems, networks, hardware,
software, data, records, communications, or property" in their
possession; and (iii) interview officers, employees, and agents
regarding compliance with the order. CFIUS retains the right to
impose additional conditions or measures "as it deems
necessary and appropriate to mitigate risk" to U.S. national
security, including measures under Section 721 and its implementing
regulations.
Once HieFo certifies divestment, CFIUS has 90 days to complete
verification and must notify HieFo in writing when divestment is
deemed completed.
Key Takeaways
This order is a clear demonstration of the executive
branch's heightened scrutiny of foreign acquisitions and
investments in U.S. businesses and underscores CFIUS'
commitment to examining ownership structures and leadership
arrangements to identify foreign control. Individuals and entities
considering new investments in a U.S. business, including a
collection of assets, particularly in sensitive technology sectors,
should conduct appropriate due diligence to identify any and all
foreign interests.
This action also underscores the additional resources allocated to
CFIUS' non-notified team in recent years. In 2024, the
Department of the Treasury published a final rule enhancing and
sharpening CFIUS' monitoring authorities and enforcement
powers, including those related to non-notified transactions.
Parties contemplating transactions subject to CFIUS'
jurisdiction, even when filing is not mandatory, should assess the
risks of declining to file.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
