CFIUS 2025: Understanding Foreign Investment Reviews and National Security Implications
Explore how the Committee on Foreign Investment in the United States (CFIUS) safeguards national security by reviewing foreign acquisitions of U.S. businesses, with a focus on recent developments and key cases.
Adam Hayes, Ph.D., CFA, is a seasoned financial writer with over 15 years of experience on Wall Street as a derivatives trader. He holds a master's degree in economics from The New School for Social Research and a Ph.D. in sociology from the University of Wisconsin-Madison. Adam is a CFA charterholder and licensed FINRA Series 7, 55 & 63 professional. Currently, he researches and teaches economic sociology and finance at Hebrew University in Jerusalem.
What Is the Committee on Foreign Investment in the United States (CFIUS)?
The Committee on Foreign Investment in the United States (CFIUS) is a multi-agency U.S. government panel tasked with reviewing financial transactions where foreign entities seek control of American businesses. Its primary mission is to assess whether such transactions pose risks to national security. Chaired by the U.S. Treasury Department, CFIUS includes members from key agencies such as the Departments of State and Defense.
CFIUS originated from the Defense Production Act of 1950 and gained prominence after President Gerald Ford’s Executive Order 11858 in 1975.
Key Facts About CFIUS
- CFIUS assists the President in evaluating the national security risks of foreign direct investments and business mergers involving U.S. companies.
- Its authority has expanded significantly over the past decade, particularly in response to the rise of global economic powers like China.
- The committee consists of nine Cabinet members, two ex-officio members, and additional appointees designated by the President.
How CFIUS Protects U.S. National Security
The U.S. government considers industries related to defense technology, advanced computing, and critical infrastructure as essential to national security. CFIUS scrutinizes foreign acquisitions in these sectors to prevent any adverse impact on America’s defense capabilities.
CFIUS operates at the crossroads of national security and technological innovation, adapting to a global economic landscape increasingly influenced by emerging economies such as China. The U.S. has traditionally promoted an open, rules-based international economic system aligned with its security and economic interests.
In response to disruptions caused by the COVID-19 pandemic, the Biden administration is exploring ways to broaden CFIUS’s scope. This includes safeguarding American scientific and economic leadership and addressing concerns over China’s dominance in semiconductor production and the presence of Chinese tech firms like TikTok in the U.S. CFIUS’s enhanced authority now covers approving or blocking mergers and acquisitions in sensitive technology and biotechnology sectors.
Important Note
Although CFIUS historically operated quietly, its role came under intense public and congressional scrutiny after the 9/11 terrorist attacks and the controversial 2006 proposal for Dubai Ports World to acquire operations at six U.S. ports.
The Role and Powers of CFIUS
Foreign companies are not obligated to notify CFIUS before acquiring U.S. firms, but the committee can review any transaction at its discretion. It must investigate deals where the acquiring party acts on behalf of a foreign government, especially in sensitive industries.
CFIUS’s membership has evolved with legislative changes, but only the U.S. President has the power to suspend transactions or require foreign investors to divest U.S. holdings.
The Exon-Florio Provision authorizes the President to block foreign acquisitions that threaten national security when existing laws are insufficient to address such risks.
Notable cases include the 2014 approval of Google’s sale of Motorola Mobility to China’s Lenovo, contrasted with CFIUS blocking the 2018 $580 million sale of Xcerra Corp. to a Chinese state-backed fund. Similarly, the $1.3 billion acquisition of Lattice Semiconductor by Canyon Bridge Capital Partners, a Chinese government-backed firm, was stopped in 2017. In 2018, President Trump blocked Broadcom’s proposed acquisition of Qualcomm due to national security concerns.
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