Infineon Technologies (IFNNY) shares plunged Thursday after the German chipmaker expressed concern that its acquisition of Wolfspeed from North Carolina-based Cree Inc. (CREE) will collapse following a warning by U.S. authorities of the risks involved in the deal.
Shares in Infineon dropped 3.8% to change hand at €16.83 each by 09:15 GMT, making it the second-biggest decliner among DAX constituents in Frankfurt. The stock has gained 7% over the past three months.
The Neubiberg-based maker of automotive semidonductors said Wednesday that the U.S. Treasury Department-led Committee on Foreign Investment informed Infineon and Cree that the $850 million deal would pose a risk to national security, and that it has not found any measures to mitigate the risk.
"Against this background, Infineon is of the opinion, that there is a considerable risk that the transaction, as agreed, is not going to close," Infineon said.
A collapse of the deal will likely be a blow for Infineon, which has repeatedly expressed its hopes for Wolfspeed to its contribution to the business, especially to its electric vehicle efforts. Silicon carbide is being increasingly used in the electrification of cars, and Infineon has said the acquisition of Wolfspeed will likely enable notable progress in the area.
The U.S. authorities' move to block deals citing national security concerns is not new.
In December, Fujian Grand Chip Investment Fund dropped its bid for German chip-making equipment supplier Aixtron after then-U.S. President Barack Obama took the recommendation of U.S. national security officials to block the Chinese investment fund from acquiring Aixtron's U.S. assets.
