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Cypress Semiconductor Plunges as Trump Weighs Blocking Infineon's $8.7 Billion Bid

Semiconductor maker and designer Cypress Semiconductor plunges amid reports the Trump administration may block Infineon Technologies' proposed $8.7 billion takeover bid.

Shares of defense-focused chipmaker and designer Cypress Semiconductor  (CY) - Get Cypress Semiconductor Corporation Report plunged another 11% on Friday following reports that U.S. national security officials are recommending President Donald Trump block Infineon Technologies proposed $8.7 billion takeover of the company.

Cypress was down 11.39% at $17 in morning trading on Friday after ending the day Thursday down 17.4% at $19.18 following reports that Infineon’s planned purchase of the company is facing concerns from the Committee on Foreign Investment in the United States (CFIUS).

CFIUS officials are concerned that Infineon’s takeover of the American chipmaker poses a risk to national security, people familiar with the matter told Bloomberg.

It wasn’t clear why CFIUS officials, which review foreign takeovers of U.S. businesses, see a national security risk. The panel, however, is particularly sensitive to any transaction that could allow Chinese buyers to get their hands on advanced U.S. technology.

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Cypress, based in San Jose, sells components and designs to the defense industry, although its products are not considered particularly sensitive. Infineon, based in Neubiberg, Germany, generates a large portion of its sales from China.

CFIUS, which is led by the Treasury Department, can recommend the president block deals to protect national security. Congress gave the panel enhanced powers in 2018 to scrutinize foreign investment in U.S. companies.

Infineon told investors on a post-earnings conference call last month that it was negotiating a potential settlement for the deal.

“We have a very good understanding about the requirements of U.S. government, what they expect and we are working together with them in order to resolve that,” Infineon CEO Reinhard Ploss said. “Our expectation is that we find a setup, which is supporting our revenue synergies.”

Shares of Infineon fell as much as 5% in trading in Frankfurt on Friday.