Foreign investments

US bans certain foreign investments in chips, AI and quantum technology

President Biden has issued an executive order that prohibits certain entities from investing in U.S. organizations if doing so gives the investor access to certain U.S. information technology and/or data.

Its catchy title is the Order to Ensure Rigorous Review of Evolving National Security Risks by the Committee on Foreign Investment in the United States. Or OERCENSRCFIUS for short, if you want to incorporate it into song lyrics.

The Committee (CFIUS) is already required to consider whether inbound investment is from a country “that has a demonstrated or stated strategic objective to acquire any type of critical technology or critical infrastructure that would affect U.S. leadership. in matters relating to national security”.

The executive order adds an obligation to consider investments in “microelectronics, artificial intelligence, biotechnology and biomanufacturing, quantum computing, advanced clean energy and climate adaptation technologies” to ensure that ‘they don’t threaten national security.

Order requires consideration of whether investors could access “data on which threat actors could engage in malicious cyber-enabled activities”

The order adds the requirement to determine whether a foreign investor can rely on data from U.S. organizations.

CFIUS is therefore now required to consider whether an investment “may provide a foreign person who may take any action that threatens to harm national security… direct or indirect access to information and systems on which threat actors could engage in malicious cyber activities.” activated activities.”

Among the issues that CFIUS is required to consider is whether a foreign investor might engage in “any activity aimed at undermining the protection or integrity of stored data or databases or systems hosting sensitive data”.

Also on the to-do list is checking that foreign investors don’t seem likely to interfere with the US election, mess with critical infrastructure, “the defense industrial base, or other national security priorities in cybersecurity”.

“The cybersecurity position, practices, capabilities, and access of foreign investors, both the foreign person and the U.S. business” must also be considered, in the event that an equity interest in an organization could lead to “malicious cyber activity in the United States”. “

Most nations control foreign investment, and national security is almost always a factor in these assessments.

This executive order gives CFIUS exceptionally strong direction to focus on the aforementioned technologies. Also notable are the requirements to consider the IT security and data access implications of an investment.

The executive order does not mention any specific nation worthy of special attention by CFIUS. But the press who were invited to a question-and-answer session on the order – which the White House helpfully transcribed despite being a background briefing – asked if he was addressing the China.

China certainly fits the forbidden elements: the Middle Kingdom sees quantum computing as a tool that could see it overtake American capabilities, has made AI a core part of its economic strategy, and wants to improve its national manufacture of semiconductors.

A senior Biden administration official responded, “there is nothing China-specific about this order or CFIUS.”

If any readers in China are interested in investing in US-based quantum silicon for an AI company, please let us know if you are eligible to do so! ®