Overwhelmed by Chinese Investment

In China, “no” is an answer that Tsinghua Unisplendour doesn’t usually hear. The Beijing-based tech power has deep political connections: It’s owned by Tsinghua University, China’s top tech school and the alma mater of President Xi Jinping. Unisplendour last year paid $2.3 billion for a controlling stake in HP’s Chinese server business. Affiliated company Tsinghua Unigroup spent over $2.2 billion to buy two Chinese chip designers in 2013 and last year unveiled plans to invest $2.7 billion in three Taiwanese chip assemblers and testers. In September, Unisplendour said it would invest $3.8 billion in Western Digital, the Irvine, Calif., hard drive maker. The purchase would have made it the company’s largest shareholder, and would have been the biggest tech investment by any Chinese buyer ever.

On Feb. 23, Unisplendour announced it was walking away from Western Digital rather than undergo a review by the Committee on Foreign Investment in the U.S., or CFIUS. The committee’s nine-member panel is chaired by Treasury Secretary Jacob Lew and also includes the heads of the departments of Justice, Homeland Security, Commerce, Defense, State, and Energy, as well as the Office of the USTR and the Office of Science and Technology Policy. Since it has the authority to block deals it concludes pose a threat to national security, it exerts great influence on which U.S. companies can be acquired by foreign corporations. The Treasury Department wouldn’t comment on CFIUS’s recent reviews.