COMMITTEE ON FOREIGN 

INVESTMENT IN THE UNITED 

STATES 

ANNUAL REPORT 

TO CONGRESS 

PUBLIC VERSION 

December 2008 

UNCLASSIFIED 

CFIUS ANNUAL REPORT TO CONGRESS 

PUBLIC VERSION 

 

December 2008
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i

SECTION I: REPORT ON COVERED TRANSACTIONS

TABLE OF CONTENTS 

Introduction .......................................................................................................................1

A. Information on 2007 Covered Transactions.................................................................2

B. Specific, Cumulative, and Trend Data on Covered Transactions, Withdrawals, and 

Investigations ..............................................................................................................3

C.1 Covered Transactions by Business Sectors of U.S. Companies: 2005-2007 ...........4

C.2 Covered Transactions by Country: 2005-2007........................................................11

D. Withdrawn Notices.....................................................................................................14

E. Mitigation Measures...................................................................................................15

F. Perceived Adverse Effects of Covered Transactions.................................................17

LIST OF TABLES 

Table B-1: Covered Transactions, Withdrawals, and Presidential Decisions 2005-2007..3

Table C-1: Covered Transactions by Sector 2005-2007...................................................4

Table C-2: Covered Transactions from the Manufacturing Sector....................................5

Table C-3: Covered Transactions from the Computer and Electronics Subsector ...........6

Table C-4: Covered Transactions from the Information Sector.........................................7

Table C-5: Covered Transactions from the Professional, Scientific, and Technical 

Services Subsector........................................................................................8

Table C-6: Covered Transactions from the Mining, Utilities, and Construction Sector .....9

Table C-7: Covered Transactions from the Wholesale Trade Sector .............................10

Table C-8: Covered Transactions by Country 2005-2007...............................................12

Table C-9: Covered Transactions by Country and Sector ..............................................13

LIST OF FIGURES 

Figure C-1: Covered Transactions by Sector 2005-2007..................................................4

Figure C-2: Covered Transactions from the Manufacturing Sector...................................5

Figure C-3: Covered Transactions from the Computer and Electronics Subsector ..........6

Figure C-4: Covered Transactions from the Information Sector .......................................7

Figure C-5: Covered Transactions from the Professional, Scientific, and Technical 

Services Subsector........................................................................................8

Figure C-6: Covered Transactions from the Mining, Utilities, and Construction Sector ....9

Figure C-7: Covered Transactions from the Wholesale Trade Sector ............................10
ii 

SECTION II: REPORT ON FOREIGN ACQUISTIONS OF U.S. 

CRITICAL TECHNOLOGIES COMPANIES

EXECUTIVE SUMMARY ................................................................................................21

ES.1 Overview ....................................................................................................................... 21

ES.2 Approach....................................................................................................................... 21

ES.3 Key Findings.................................................................................................................. 22

1 INTRODUCTION.......................................................................................................23

1.1 Scope of the Report ......................................................................................................... 23

1.2 Approach for Evaluation of Foreign Acquisition of U.S. Critical Technology Companies.24

1.3 Report Participants........................................................................................................... 29

2 EXTENT OF FOREIGN DIRECT INVESTMENT IN CRITICAL TECHNOLOGY 

INDUSTRIES ............................................................................................................30

2.1 Key Foreign Direct Investment Finding............................................................................ 30

2.2 Have Foreign Firms Concentrated their Investment in Critical Technology Industries?.. 30

2.3 Foreign-Owned Affiliates’ Share of U.S. Critical Technology Industries.......................... 30

3 WHETHER THERE IS CREDIBLE EVIDENCE OF A COORDINATED STRATEGY 

TO ACQUIRE CRITICAL TECHNOLOGY COMPANIES..........................................32

3.1 Key Coordinated Strategy Findings ................................................................................. 32

3.2 Summary of Foreign M&A Activity in the United States................................................... 32

4 WHETHER FOREIGN GOVERNMENTS USED ESPIONAGE ACTIVITIES TO 

OBTAIN COMMERCIAL SECRETS RELATED TO CRITICAL TECHNOLOGIES...38

4.1 Key Espionage Finding .................................................................................................... 38

4.2 The “Asymmetric” Foreign Intelligence Threat................................................................. 38

APPENDIX A – CRITICAL TECHNOLOGIES.................................................................39

APPENDIX B – M&A TRANSACTIONS: COUNTRY-BY-COUNTRY EVALUATION ...43

B.1 United Kingdom.......................................................................................................... 45

B.2 Canada....................................................................................................................... 46

B.3 Japan ......................................................................................................................... 47

B.4 Germany .................................................................................................................... 48

B.5 France ........................................................................................................................ 49

B.6 India ........................................................................................................................... 49

APPENDIX C – CHARTS AND GRAPHS......................................................................51

APPENDIX D – Abbreviations and Acronyms...............................................................67

LIST OF TABLES 

Table 1-1. Critical Sectors List ........................................................................................27

Table 3-1. Foreign Companies Most Active in Acquiring U.S. Critical Technology Firms 

(January 2006 – December 2007)...............................................................33

Table 3-2. Transactions & Deal Value by Country..........................................................34

Table A-1. Critical Technologies List...............................................................................42

Table B-1. Foreign Countries Most Active in Completed Acquisitions of U.S. Critical 

Technology Firms........................................................................................43

 
iii

LIST OF FIGURES 

Figure 1-1. Report Process.............................................................................................26

Figure 3-1. Total Value of Completed Transactions by Country .....................................34

Figure 3-2. Completed Transactions by Technology and Year.......................................35

Figure 3-3. Completed Foreign Deals in Critical Technologies by Region......................36

Figure 3-4. Regional Breakdown of Transactions, 1994-2007........................................36

Figure 3-5. Completed Transactions by Region within Each Sector...............................37

Figure B-1. Completed Foreign Deals by Technology & Country ...................................44

Figure B-2. Completed Foreign Deals by Country in Each Sector..................................45

Figure C-1. Completed Foreign Deals in Critical Technologies with Region Detail ........51

Figure C-2. Completed Foreign Deals in Advanced Materials and Processing ..............52

Figure C-3. Completed Foreign Deals in Chemicals.......................................................53

Figure C-4. Completed Foreign Deals in Advanced Manufacturing................................54

Figure C-5. Completed Foreign Deals in Information Technology..................................55

Figure C-6. Completed Foreign Deals in Telecommunications.......................................56

Figure C-7. Completed Foreign Deals in Microelectronics..............................................57

Figure C-8. Completed Foreign Deals in Semiconductor Fabrication Equipment...........58

Figure C-9. Completed Foreign Deals in Military Related Electronics ............................59

Figure C-10. Completed Foreign Deals in Biotechnology...............................................60

Figure C-11. Completed Foreign Deals in Professional/Scientific Instruments...............61

Figure C-12. Completed Foreign Deals in Aerospace and Surface Transportation........62

Figure C-13. Completed Foreign Deals in Energy ..........................................................63

Figure C-14. Completed Foreign Deals in Space Systems.............................................64

Figure C-15. Completed Foreign Deals in Marine Systems............................................65
iv 

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1

SECTION I: REPORT ON COVERED TRANSACTIONS

Introduction 

Section 721(m)(2) of the Defense Production Act of 1950 (50 U.S.C. App. 

2170(m)(2)), as amended by the Foreign Investment and National Security Act of 

2007, or “FINSA” (Pub. L. 110-49), requires that the Committee on Foreign 

Investment in the United States (“CFIUS” or “the Committee”) produce an annual 

report on covered transactions that provides: 

‘‘(A) A list of all notices filed and all reviews or investigations completed 

during the period, with basic information on each party to the transaction, 

the nature of the business activities or products of all pertinent persons, 

along with information about any withdrawal from the process, and any 

decision or action by the President under this section.” 

‘‘(B) Specific, cumulative, and, as appropriate, trend information on the 

numbers of filings, investigations, withdrawals, and decisions or actions by 

the President under this section.” 1, 

‘‘(C) Cumulative and, as appropriate, trend information on the business 

sectors involved in the filings which have been made, and the countries 

from which the investments have originated.” 

‘‘(D) Information on whether companies that withdrew notices to the 

Committee in accordance with subsection (b)(1)(C)(ii) of this section have 

later refiled such notices, or, alternatively, abandoned the transaction.” 

‘‘(E) The types of security arrangements and conditions the Committee 

has used to mitigate national security concerns about a transaction, 

including a discussion of the methods that the Committee and any lead 

agency are using to determine compliance with such arrangements or 

conditions.” 

‘‘(F) A detailed discussion of all perceived adverse effects of covered 

transactions on the national security or critical infrastructure of the United 

States that the Committee will take into account in its deliberations during 

the period before delivery of the next report, to the extent possible.” 

This Annual Report was provided to Congress in a classified version on 

November 14, 2008. This unclassified version contains no information on 

specific transactions notified to CFIUS due to the prohibition in Section 721(c) 

(50 U.S.C. App. 2170(c)) against public disclosure of such information.

 

1

 For purposes of this report, “filings” is understood to refer to notices filed under section 721. 
2 

A. Information on 2007 Covered Transactions 

The classified version of this report contains a table listing all 138 notices of 

transactions that were filed with CFIUS in 2007 and that CFIUS determined to be 

covered transactions under section 721 (“covered transactions” or “notices”). 

That table sets forth information on each party to the notice, including the nature 

of their business activities or products, and details on any withdrawal. While that 

table is not included here, provided below is aggregate information regarding 

those 138 notices: 

• Ten notices, about seven percent of all notices, were withdrawn during 

review, and five (four percent) were withdrawn during investigation. 

• CFIUS conducted a 45-day investigation for six of the 138 notices. 

o The parties to five of the six investigations withdrew their notices 

during the 45-day period. 

o In three of the investigations, the companies subsequently 

provided a new notification and CFIUS concluded action without 

objection within the next 30-day review period. 

o In two of the investigations, the companies abandoned the 

transaction. 

o For the remaining investigation, changes to the structure of the 

transaction resulted in the foreign party no longer gaining control 

over the U.S. person, leading to the determination that the 

transaction was not a covered transaction. 

• The President did not take action to suspend or prohibit any transactions 

during 2007. 
3

B. Specific Cumulative, and Trend Data on Covered 

Transactions, Withdrawals and Investigations 

In the years 2005 to 2007, companies filed 313 notices of transactions. Roughly 

eight percent of such notices (24) were withdrawn during the review stage, five 

percent (15) resulted in an investigation, and less than one percent (2) resulted in 

a Presidential decision. 

There was an upward trend over the last three years in the number of notices, 

but there was no clear trend in the percentage of notices that resulted in 

withdrawals or investigations. The number of covered transactions increased 

from 64 in 2005, to 111 in 2006 and 138 in 2007. As shown below in Table B-1, 

in 2005, only one resulted in an investigation. In 2006, 13 percent of total notices 

(14) resulted in withdrawal during the review stage, and six percent (7) resulted 

in investigations. In 2007, seven percent of total notices (10) resulted in 

withdrawals during the review stage, and four percent (6) resulted in 

investigations. 

During the three-year period, 2005-2007, there were two Presidential decisions. 

In each of these cases the President decided not to suspend or prohibit the 

transaction. 

Covered Transactions, Withdrawals, and Presidential Decisions 

2005 – 2007 

Year 

Number 

of 

Notices 

 Notices 

Withdrawn 

During 

Review 

 Number of 

Investigations

 Notices 

Withdrawn 

During 

Investigation 

Presidential 

Decisions 

2005 64 1 1 1 0 

2006 111 14 7 5 2 

2007 138 10 6 5 0 

Total 313 25 14 11 2 

Table B-1: Covered Transactions, Withdrawals, and Presidential Decisions 2005-2007 
4 

C.1 Covered Transactions by Business Sectors of U.S. 

Companies: 2005-2007

The U.S. businesses that were parties to the notices filed with CFIUS are from a 

wide range of industrial sectors, including real estate, leasing, and automotive 

parts. Almost half of such notices filed with CFIUS during the 2005-2007 period 

involved U.S. businesses in the manufacturing sector (148, or 47 percent), which 

includes computer and electronics products, while more than one third were in 

the information sector (112, or 36 percent), which includes publishing and 

telecommunications. 

The table and charts below give a breakdown by sector and by year for the 313 

cumulative notices that came before CFIUS from 2005 through 2007. 

Covered Transactions by Sector and Year, 2005 – 2007 

Year Information Manufacturing 

Mining, 

Utilities and 

Construction 

Other Wholesale 

Trade 

Grand 

Total 

2005 24 (38%) 34 (53%) 1 (2%) 5 (8%) 64 

2006 32 (29%) 53 (48%) 15 (14%) 1 (1%) 10 (9%) 111 

2007 56 (41%) 61 (44%) 11 (8%) 10 (7%) 138 

Total 112 (36%) 148 (47%) 27 (9%) 1 (0%) 25 (8%) 313 

Table C-1: Covered Transactions by Sector 2005-2007 

Figure C-1: Covered Transactions by Sector 2005-2007 

Covered Transactions, 2005 to 2007 (313 total)

Mining, Utilities and 

Construction,

9%

Manufacturing,

47%

Wholesale Trade,

8%

Information,

36%

Other,

<1%
5

Manufacturing Sector

The manufacturing sector accounted for 47 percent of all notices filed with CFIUS 

from 2005 through 2007. Computer and electronic products comprised 34 

percent of manufacturing sector notices during the period. Transportation 

equipment accounted for another 20 percent of the notices in the sector. 

The data show that, while manufacturing was the most active sector for notices 

between 2005 and 2007, the trend has been towards a declining percentage of 

the total in this sector each year. Notices in the manufacturing sector fell from 53 

percent of the total in 2005 to 48 percent in 2006 and 44 percent in 2007. 

Table C-2: Covered Transactions from the Manufacturing Sector 

Manufacturing

Other

35%

Computer and 

Electronic Products 

34%

Machinery

11%

Plastics & Rubber Products

Primary Metal

Nonmetallic Mineral 

Plastics and Rubber

Chemical

Petroleum and Coal 

Products

Miscellaneous

Transportation 

Equipment

20%

Electrical Equip. Appl., & 

Comp.

Figure C-2: Covered Transactions from the Manufacturing Sector 

Manufacturing NAICS Code Number of

Notices

% of Total 

Manufacturing

Textile Product Mills 314 1 1%

Petroleum and Coal Products 324 4 3%

Chemical 325 12 8%

Plastics and Rubber Products 326 5 3%

Nonmetallic Mineral Product 327 3 2%

Primary Metal 331 7 5%

Fabricated Metal Product 332 5 3%

Machinery 333 16 11%

Computer and Electronic Product 334 51 34%

Electrical Equip., Appl., & Comp. 335 9 6%

Transportation Equipment 336 30 20%

Miscellaneous 339 5 3%
6 

Semiconductor and other electronic component manufacturing accounted for 41 

percent of the 51 notices in the computer and electronic products subsector from 

2005 through 2007. Navigational, measuring, electromedical, and control 

instruments manufacturing accounted for an additional 25 percent of these 

notices. 

Table C-3: Covered Transactions from the Computer and Electronics Subsector 

Computer and Electronic Products

Semiconductor and 

Other Electronic 

Component 

Manufacturing

41%

 Navigational, 

Measuring, 

Electromedical, & 

Control Intruments 

Manufacturing

25%

Computer and 

Peripherals 

Manufacturing

16%

Communications 

Equipment 

Manufacturing

18%

Figure C-3: Covered Transactions from the Computer and Electronics Subsector 

Information Sector

The information sector accounted for 36 percent of all notices filed with CFIUS 

from 2005 through 2007. Professional, scientific, and technical services 

accounted for nearly half of all information sector notices during the 2005-2007 

period. Publishing industries (except Internet) accounted for another 24 percent. 

Computer and Electronic Products NAICS Code Number of

 Notices

Computer and Peripheral Equipment Manufacturing 3341 8

Communications Equipment Manufacturing 3342 9

Semiconductor and Other Electronic Component 

Manufacturing

3344 21

Navigational, Measuring, Electromedical, and Control

Instruments Manufacturing

3345 13
7

Table C-4: Covered Transactions from the Information Sector 

Information

Administrative and 

Support Services

Funds, Trusts, etc

Securities and Other 

Financial Investments

Professional, 

Scientific, and 

Technical Services, 

46% 

Telecommunications,

21% 

Publishing Industries 

(except Internet),

24% 

Other,

9%

Figure C-4: Covered Transactions from the Information Sector 

Architectural, engineering, and related services accounted for 40 percent of the 

notices in the professional, scientific, and technical services subsector. Another 

40 percent took place in computer systems design and related services. 

Information NAICS Code Number of

 Notices

% of Total

Information

Publishing Industries (except Internet) 511 27 24%

Telecommunications 517 23 21%

Securities and Other Financial Investments 523 2 2%

Funds, Trusts, and Other Financial Vehicles 525 1 1%

Professional, Scientific, and Technical Services 541 52 46%

Administrative and Support Services 561 7 6%
8 

Table C-5: Covered Transactions from the Professional, Scientific, and Technical Services 

Subsector 

Professional, Scientific, and Technical Services

Computer Systems 

Design and Related 

Services, 40%

Management, 

Scientific, and 

Technical Consulting 

Services, 13%

Scientific Research 

and Development 

Services, 6%

Architectural, 

Engineering, and 

Related Services, 41%

Figure C-5: Covered Transactions from the Professional, Scientific, and Technical 

Services Subsector 

Mining, Utilities, and Construction Sector

The mining, utilities, and construction sector accounted for 9 percent of notices 

filed with CFIUS from 2005 through 2007. Utilities – electric power generation, 

transmission and distribution accounted for the largest percentage of activity in 

this sector with 15 notices (56 percent). 

Professional, Scientific, and Technical Services NAICS Code Number of

 Notices

Architectural, Engineering, and Related Services 5413 21

Computer Systems Design and Related Services 5415 21

Management, Scientific, and Technical Consulting 

Services

5416 7

Scientific Research and Development Services 5417 3
9

Table C-6: Covered Transactions from the Mining, Utilities, and Construction Sector 

Construction of 

Buildings, 

11%

Oil and Gas 

Extraction, 

11%

Mining (except Oil and 

Gas), 

15%

Support Activities for 

Mining, 

7%

Utilities - Electric 

Power Generation, 

Transmission & 

Distribution,

 56%

Mining, Utilities and Construction 

Figure C-6: Covered Transactions from the Mining, Utilities, and Construction Sector 

Wholesale Trade Sector

The wholesale trade sector accounted for 8 percent of notices filed with CFIUS 

from 2005 through 2007. Support activities for transportation accounted for 64 

percent of wholesale trade sector notices during the period. Merchant 

Wholesalers-Durable Goods accounted for another 16 percent of the sector. 

Mining, Utilities and Construction NAICS Code Number of

 Notices

% of Total 

M-U-C

Oil and Gas Extraction 211 3 11%

Mining (except Oil and Gas) 212 4 15%

Support Activities for Mining 213 2 7%

Utilities - Electric Power Generation, Transmission and 

Distribution 

221 15 56%

Construction of Buildings 236 3 11%

Heavy and Civil Engineering Construction 237 0 0%
10 

Table C-7: Covered Transactions from the Wholesale Trade Sector 

Wholesale Trade

Support Activities for 

Transportation,

64%

Couriers and 

Messengers

Merchant Wholesalers, 

Durable Goods,

16%

Merchant Wholesalers, 

Nondurable Goods

Electronics and 

Appliance Stores

Water Transportation

Transit and Ground 

Passengater 

Transportation

Other,

20%

Figure C-7: Covered Transactions from the Wholesale Trade Sector 

Wholesale Trade NAICS Code Number of

 Notices

% of Total 

Wholesale 

Trade

Merchant Wholesalers, Durable Goods 423 4 16%

Merchant Wholesalers, Nondurable Goods 424 1 4%

Electronics and Appliance Stores 443 1 4%

Water Transportation 483 1 4%

Transit and Ground Passenger Transportation 485 1 4%

Support Activities for Transportation 488 16 64%

Couriers and Messengers 492 1 4%
11

C.2 Covered Transactions by Country: 2005-2007 

The first table below breaks down the notices from 2005 through 2007 by country 

and year. There is no clear trend in the breakdown of notices by year. Investors 

from the United Kingdom, Canada, and France accounted for 44 percent of the 

total over this three-year period (139 notices). Companies in the United Kingdom 

alone accounted for 25 percent of the total (79 notices) over the three-year 

period. 

The second table below shows that there is no clear tendency of companies in 

one country to prefer transactions in a specific industry sector. Multiple notices 

from a single country were typically spread amongst different sectors. 
12 

Covered Transactions by Country, 2005 - 2007 

Country 2005 2006 2007 Total, 2005-

07 

Australia 2 7 9 18 

Austria 1 1 

Bahrain 2 1 3 

Belgium 2 1 3 

Bermuda 2 1 3 

Brazil 4 1 5 

Canada 6 8 21 35 

Cayman Islands 1 1 

China 1 3 4 

Denmark 1 1 

Finland 3 1 4 

France 9 9 7 25 

Germany 2 4 6 12 

Hong Kong 1 1 2 

India 2 5 7 

Ireland 1 1 2 

Israel 1 9 6 16 

Italy 1 3 3 7 

Japan 3 6 1 10 

Korea 1 1 

Kuwait 1 2 2 5 

Luxembourg 3 1 4 

Malaysia 1 1 

Mexico 2 2 

Netherlands 4 7 11 

Norway 1 1 1 3 

Pakistan 2 2 

Qatar 1 1 2 

Russia 2 2 

Saudi Arabia 1 1 2 

Singapore 2 3 1 6 

South Africa 1 1 

Spain 2 6 8 

Sweden 1 1 2 

Switzerland 1 1 6 8 

Taiwan 3 3 

UAE 1 2 7 10 

United Kingdom 24 23 32 79 

Venezuela & Spain 2 2 

Total 64 111 138 313 

Table C-8: Covered Transactions by Country 2005-2007 
13

Country Information Manufacturing

Mining, 

Utilities and 

Construction

Other Wholesale 

Trade Total

Australia 6 3 5 4 18

Austria 1 1

Bahrain 2 1 3

Belgium 3 3

Bermuda 1 2 3

Brazil 4 1 5

Canada 21 7 5 2 35

Cayman Islands 1 1

China 1 3 4

Denmark 1 1

Finland 4 4

France 6 14 1 4 25

Germany 5 4 1 2 12

Hong Kong 2 2

India 7 7

Ireland 1 1 2

Israel 5 11 16

Italy 7 7

Japan 5 5 10

Korea 1 1

Kuwait 1 1 3 5

Luxembourg 3 1 4

Malaysia 1 1

Mexico 2 2

Netherlands 2 8 1 11

Norway 1 2 3

Pakistan 2 2

Qatar 2 2

Russia 2 2

Saudi Arabia 1 1 2

Singapore 3 3 6

South Africa 1 1

Spain 1 7 8

Sweden 2 2

Switzerland 2 6 8

Taiwan 3 3

UAE 2 4 1 3 10

United Kingdom 28 44 4 3 79

Venezuela & Spain 2 2

Total 112 148 27 1 25 313

Covered Transactions by Sector, 2005 - 2007

Table C-9: Covered Transactions by Country and Sector 
14 

D. Withdrawn Notices 

Parties may withdraw notice of a transaction once the Committee approves a 

written request for withdrawal from the parties. 

In 2007, 10 notices of covered transactions were withdrawn during the review 

period, and five were withdrawn during investigation. In 13 of these 15 notices, 

the companies re-notified their transactions and CFIUS concluded review without 

objection in a new 30-day review period. In the remaining instances, the 

companies withdrew their notices and subsequently abandoned the transaction. 
15

E. Mitigation Measures 

The Committee has adopted procedures to evaluate and ensure that parties to a 

covered transaction remain in compliance with any risk mitigation measure 

entered into with CFIUS agencies, whether through a mitigation agreement, 

assurances, or other conditions. For all mitigation measures entered into since 

FINSA became effective, Treasury appoints a lead agency or agencies for 

monitoring of compliance with such mitigation. Lead agencies carry out their 

monitoring responsibilities on behalf of the Committee and report back to the 

Committee. In addition, the Committee requests that signatory agencies to 

mitigation entered into before FINSA became effective report on compliance with 

those measures. As described below, all lead agencies appointed to monitor 

mitigation compliance have implemented processes to carry out their 

responsibilities. The mitigation measures covered by this report were all entered 

into prior to the January 23, 2008, issuance of Executive Order 13456. 

Since 1997, when CFIUS first negotiated a mitigation measure in the context of a 

transaction notified under section 721, CFIUS agencies have entered into a total 

of 52 mitigation agreements with private parties. Mitigation measures have 

included a number of different types of legally binding undertakings, ranging from 

national security agreements (NSAs), which are generally contracts that seek to 

address a number of specific risks, to letters of assurance, which are simpler 

documents appropriate for less complex cases. 

In 2007, CFIUS agencies negotiated, and parties entered into, 14 mitigation 

agreements related to 12 different covered transactions.2 For two of these 

transactions, CFIUS negotiated two separate agreements. 

• Four USG agencies served as the USG parties to these agreements. 

o For seven of these 14 agreements, just one CFIUS member 

agency served as the USG party. 

o For the remaining seven agreements, two or more CFIUS member 

agencies served as the USG parties. 

• The agreements involved transactions in the following industries: basic 

manufacturing; energy; operations services for the aviation and maritime 

industries; and information technology, both hardware and software. 

• Eleven of the agreements were letters of assurance to a USG agency or 

agencies from parties to notices filed with CFIUS. These letters outline the 

actions the parties to transactions agreed to take to address the national 

security concerns raised by CFIUS. 

• Three of the agreements were NSAs, of which two were new NSAs and one 

was an amendment to an existing NSA. 

 

2

 By way of comparison, 15 mitigation agreements were signed in 2006 and six mitigation 

agreements were signed in 2005. 
16 

• All of the agreements required the businesses involved to take specific and 

verifiable actions to address identified national security risks. 

• Some of the agreements also required the companies to notify the concerned 

USG agency in the event of certain changes that could affect national 

security. 

The USG agencies that are parties to these agreements use a variety of means 

to monitor compliance by the companies that are parties, including, where 

appropriate: 

o periodic reporting to USG agencies by the companies; 

o on-site compliance reviews by USG agencies; 

o third-party audits when provided for by the terms of the mitigation 

agreement; and 

o investigations and remedial actions if anomalies or breaches are 

discovered. 

In light of the number and complexity of mitigation agreements, CFIUS agencies 

have taken a variety of actions to maximize their capacity to monitor compliance, 

including: 

o increasing USG staffing levels and assigning staff responsibilities 

for monitoring of compliance; 

o designing tracking systems to monitor required reports; and 

o instituting internal instructions and procedures to ensure that inhouse expertise is drawn upon to analyze compliance with 

agreements. 
17

F. Perceived Adverse Effects of Covered Transactions 

In reviewing a covered transaction, CFIUS evaluates all relevant national security 

considerations identified by its members during the review and does not 

conclude action on a covered transaction if there are unresolved national security 

concerns. Depending on the particular facts and circumstances regarding a 

covered transaction, the determination of whether a covered transaction 

threatens national security involves an evaluation of a broad range of issues, 

including the following “national security factors” listed under section 721(f) of the 

Defense Production Act of 1950, as amended: 

1. domestic production needed for projected national defense 

requirements; 

2. the capability and capacity of domestic industries to meet national 

defense requirements, including the availability of human resources, 

products, technology, materials, and other supplies and services; 

3. the control of domestic industries and commercial activity by foreign 

citizens as it affects the capability and capacity of the United States to 

meet the requirements of national security; 

4. the potential effects of the transaction on sales of military goods, 

equipment, or technology to a country that 

a. the Secretary of State has identified as supporting terrorism, 

being of concern regarding missile proliferation, or being of 

concern regarding the proliferation of chemical and biological 

weapons; 

b. the Secretary of Defense has identified as posing a potential 

regional military threat to the interests of the United States; or 

c. is listed on the Nuclear Non-Proliferation-Special Country List at 

15 C.F.R. Part 778, Supp. 4, or any successor list; 

5. the potential effects of the transaction on U.S. international 

technological leadership in areas affecting U.S. national security; 

6. the potential national security-related effects on U.S. critical 

infrastructure, including major energy assets; 

7. the potential national security-related effects on U.S. critical 

technologies; 
18 

8. whether the transaction could result in the control of a U.S. business 

by a foreign government or entity controlled or acting on behalf of a 

foreign government; 

9. the relevant country’s adherence to nonproliferation control regimes; 

10. the relevant country’s record of cooperating with United States in 

count-terrorism efforts; 

11. the potential that the transaction presents for transshipment or 

diversion of technologies with military applications, including the 

relevant country’s export control laws and regulations; 

12. the long-term projection of U.S. requirements for sources of energy 

and other critical resources and materials; and 

13. such other factors as the President or the Committee may determine to 

be appropriate, generally or in connection with a specific review or 

investigation. 

These statutory national security factors focus CFIUS’s analysis solely on the 

genuine national security effects of covered transactions. Several of these 

factors have been further defined in statute, and others have been further defined 

by regulation. For example, section 721 defines “critical infrastructure” as 

“systems and assets, whether physical or virtual, so vital to the United States that 

the incapacity or destruction of such systems or assets would have a debilitating 

impact on national security.” The regulations that the Treasury Department 

issued on November 21, 2008, further clarify that the determination of whether a 

covered transaction involves foreign control over “critical infrastructure” depends 

on what the “particular” systems or assets are, rather than on the assets’ sector 

or class more broadly. Thus, in the context of a review or investigation under 

section 721, CFIUS would have to consider whether the incapacity or destruction 

of the “particular” systems or assets that would be subject to foreign control 

would have a debilitating impact on national security. 

In addition, section 721, as amended by FINSA, provides that “critical 

technologies” include “critical technology, critical components, or critical 

technology items essential to national defense,” as identified under section 721 

and subject to regulations. The issued regulations define critical technologies to 

include certain articles, materials, software, technology, and services that are 

already subject to various existing regulatory regimes, such as the Export 

Administration Regulations (EAR), International Traffic in Arms Regulations 

(ITAR), nuclear materials and activities regulations, and regulations related to 

certain agents and toxins. The acquisition of such technologies by a potential 

adversary of the United States could lead to the enhancement of the offensive 

capabilities of that adversary to the detriment of the national security of the 

United States. 
19

In evaluating transactions, the Committee considers the national security risks 

related to the statutory national security factors listed above, and will continue to 

do so. The Committee engages the intelligence community in evaluating the 

risks and threat involved in each transaction. The Office of the Director for 

National Intelligence via the National Intelligence Council provides an all-source 

assessment of each of the proposed transactions that CFIUS reviews. 
20 

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21

SECTION II: REPORT ON FOREIGN ACQUISTIONS OF U.S. 

CRITICAL TECHNOLOGIES COMPANIES 

 EXECUTIVE SUMMARY 

ES.1 Overview 

This section of the Annual Report to Congress has been prepared in accordance 

with Section 721(m)(3) of the Defense Production Act of 1950 (50 U.S.C. App. 

2170(m)(3)), as amended by the Foreign Investment and National Security Act of 

2007, or “FINSA” (Pub. L. 110-49). Section 721(m)(3) requires yearly a report 

which provides: 

“(i) an evaluation of whether there is credible evidence of a coordinated 

strategy by 1 or more countries or companies to acquire United States 

companies involved in research, development, or production of critical 

technologies for which the United States is a leading producer; and” 

“(ii) an evaluation of whether there are industrial espionage activities directed 

or directly assisted by foreign governments against private United States 

companies aimed at obtaining commercial secrets related to critical 

technologies.” 

This year’s report covers a two-year period, 2006-2007, starting from the end of 

the period covered by the 2006 quadrennial Report to Congress on Foreign 

Acquisition of and Espionage Activities Against U.S. Critical Technology 

Companies (the “2006 Report”), the predecessor to this section of the report. 

This report uses the same definition of the term “critical technologies” that was 

used in the 2006 Report, namely: “those that satisfy long-term national economic 

and scientific objectives, such as strong national defense, improved economic 

competitiveness, a rising standard of living, improved public health, and energy 

independence.” 

ES.2 Approach 

The Department of the Treasury adopted the processes used for the 2006 Report 

to prepare this report and to define the data sources and list of critical 

technologies upon which this report is based. 

Using the data sources and methodology established for the 2006 Report, 

Treasury’s Office of Investment Security identified specific transactions involving 

foreign acquisitions of or mergers with U.S. critical technology companies. 

Treasury then distributed the merger and acquisition (“M&A”) data to CFIUS 

member agencies’ subject matter experts (“SMEs”), who reviewed the industryand country-specific M&A data and identified the M&A transactions that might 

signal a coordinated strategy on behalf of a foreign government or company. 

This report presents the results of the comprehensive analysis of 1,073 M&A 
22 

transactions between foreign investors and U.S. companies in industrial sectors 

that include critical technology capabilities. 

ES.3 Key Findings 

1) Based on the analysis of M&A data, there is no credible evidence of a 

widespread coordinated strategy among foreign governments or 

corporations to acquire U.S. companies involved in research, 

development, or production of critical technologies through foreign direct 

investment. 

2) Foreign firms are not concentrating their investments solely in critical 

technology areas or taking an increasingly dominant position in U.S. 

critical technology industries. 
23

1 INTRODUCTION 

This section of the Annual Report to Congress of the Committee on Foreign 

Investment in the United States (CFIUS Annual Report) has been prepared in 

accordance with Section 721(m)(3) of the Defense Production Act of 1950 (50 U.S.C. 

App. 2170), as amended by the Foreign Investment and National Security Act of 2007 

(FINSA) (Pub. L. 110-49). This report covers M&A activity in the years 2006 and 

2007. 

Unless otherwise specified, references to the country of origin of a foreign investor or 

company do not imply an association of the company with the country’s government. 

1.1 Scope of the Report

This section of the report is divided into the following subsections: 

1. Introduction 

2. Foreign Investment in Critical Technology Industries 

3. Whether there is Credible Evidence of a Coordinated Strategy to Acquire U.S. 

Critical Technology Companies 

4. Whether Foreign Governments Used Espionage Activities to Obtain 

Commercial U.S. Secrets Related to Critical Technologies 

5. Appendices 

Subsection 1 explains the background, approach, and scope of this report. 

Subsection 2 uses data compiled by the Department of Commerce’s Bureau of 

Economic Analysis (“BEA”) to demonstrate the extent to which foreign direct 

investment in the United States is concentrated in industries that include critical 

technologies. 

Subsection 3 presents findings based on a review of critical technology M&A 

transactions obtained from a subscription-based database of publicly available 

information on mergers and acquisitions.3

 This section also presents the analysis of a 

comprehensive survey of 1,073 M&A transactions between foreign investors and U.S. 

companies in industrial sectors with critical technology capabilities during the period 

from January 1, 2006, through December 31, 2007. This section focuses on 

completed deals by companies from countries that were most active in mergers with 

and acquisitions of U.S. critical technology companies. Of the 1,073 proposed M&A 

transactions, 869 were completed4

. 

 

3

 The team searched the Thomson One Banker database for mergers and acquisitions of each critical 

technology. 

4

 The data presented in Section 3 and in the charts in Appendix C focus on completed deals rather than 

proposed deals to give an accurate historical account of technologies that may have been acquired by 

foreign governments within the period of the report. There were 204 proposed deals that Thomson lists 

as “intended,” “pending,” or “rumored.” It is difficult to ascertain whether some of the transactions in 
24 

Subsection 4 discusses economic intelligence gathering, including espionage, used to 

obtain commercial secrets involving critical technologies, and is not limited to foreign 

direct investment. 

Appendix A contains the list of Critical Technologies. Appendix B provides a countryby-country review of foreign M&A transactions involving U.S. critical technology 

companies and evaluates the evidence of government involvement in a private sector 

strategy. Appendix C contains detailed charts of each sector with the regional and 

country breakdown of foreign mergers with or acquisitions of U.S. critical technology 

companies. Appendix D contains a list of abbreviations and acronyms used within this 

report. 

1.2 Approach for Evaluation of Foreign Acquisition of U.S. Critical Technology 

Companies 

The Treasury Department prepared this report using the same data sources and 

definitions as those used in the 2006 Report, specifically: 

• Data – The primary source of data was the Thomson One Banker database 

(hereafter the Thomson database) augmented by data from the BEA and 

intelligence sources. The Thomson database is a comprehensive source of 

publicly announced M&A activity and was also used as the primary source for 

M&A data in the two quadrennial Reports to Congress on Foreign Acquisition of 

and Espionage Activities Against U.S. Critical Technology Companies. 

• Definitions

Critical Technologies. “Critical technologies” include a list of 

technologies identified5

 based on the “Military Critical Technologies List,” 

a compendium of existing goods and technologies that the Department 

of Defense assesses would permit significant advances in the 

development, production, and use of military technologies by potential 

adversaries. That list was augmented with additional input provided by 

the White House Office of Science and Technology Policy. The 

technologies were classified into 14 sectors and specific technologies, 

with North American Industry Classification System (NAICS) or Standard 

Industrial Classification (SIC) codes assigned to each technology, in 

order to be able to identify the M&A transactions of interest and facilitate 

their analysis by specific sector/technology. 

Coordinated Strategy. For purposes of this report, a coordinated foreign 

acquisition strategy was considered to be a plan of action reflected in 

directed efforts developed and implemented by a foreign government in 

association with one or more foreign companies to acquire U.S. 

 those categories may in fact have been completed, especially those involving privately-held companies, 

which are under no regulatory obligation to disclose deals publicly. 

5

 FINSA provides the following definition of critical technology: “The term `critical technologies' means 

critical technology, critical components, or critical technology items essential to national defense, 

identified pursuant to this section, subject to regulations issued at the direction of the President . . . .” 
25

companies with critical technologies. The efforts of a single company in 

pursuit of business goals were not considered to be a coordinated 

strategy. Individual company strategies encompass such business goals 

as: entry into the U.S. market; increased market share; increased sales; 

access to new technologies; and diversification out of mature industries. 

 Examples of suspect behaviors that could be evidence of a 

coordinated strategy include: 

• A pattern of actual or attempted acquisitions of U.S. firms 

by foreign entities; 

• Evidence that specific completed or attempted acquisitions 

of companies with critical technologies had been ordered 

by foreign governments or foreign-controlled firms; or 

• The provision of narrowly targeted incentives by foreign 

governments or foreign-controlled firms (e.g., grants, 

concessionary loans, or tax breaks), especially those that 

appear to market observers to be disproportionately 

generous, to acquire U.S. firms with critical technologies. 

The Treasury Department and the other CFIUS agencies addressed the requirements 

of Section 721(m)(3) by: 

• Analyzing the pattern of mergers with or acquisitions of U.S. companies in 

industries involved in the research, development, or production of critical 

technologies over the report period from January 1, 2006, through December 

31, 2007, by investors based in foreign countries. 

− The report team concentrated on foreign direct investment through 

mergers with and acquisitions of companies involved in all critical 

technologies, not only those companies solely supporting military and 

defense industries. 

− The report team did not attempt to evaluate issues relating to other 

avenues of foreign access to U.S. commercial critical technologies, 

such as licensing, contracting, or other arrangements that do not 

represent ”acquisitions” of U.S. companies. 

• Assessing attempts by governments of major economic competitors to obtain 

commercial and dual-use critical technologies, recognizing the distinction 

between espionage and legal economic intelligence gathering. 

− Treasury and the other CFIUS agencies did not attempt to evaluate 

foreign espionage in areas other than commercial, dual-use, military, or 

other U.S. critical technologies or against companies not 

headquartered in the United States. 

− In addition, the report team briefly reviewed other countries that have 

historically sought information on critical technologies through the use 

of those countries’ intelligence services. 
26 

The methodology used in the development of this report is outlined in Figure 1-1. 

Treasury gathered the data on M&A activity by NAICS/SIC code and technology sector 

and distributed the data to CFIUS agencies’ SMEs for review.6 The SMEs reviewed 

each transaction and identified a list of M&A transactions for further investigation. The 

team further examined the identified transactions and prepared the report. 

Figure 1-1. Report Process 

The Thomson database was used to identify the M&A data for the report. The data 

covered a two-year period of foreign companies’ mergers with and acquisitions of U.S. 

companies that provide goods or services that are included in the critical technologies 

list. As noted previously, not all proposed M&A transactions were completed. For 

 

6

 The subject matter experts involved in this report are individuals with specific expertise in the particular 

critical technology sectors. Some of these individuals regularly participate in the CFIUS process for 

their respective agencies. 

NOTE:

NS = Not Significant

S = Significant

START

END

DEALS

By NAIC

By Sector

Merge

Lists

Subject Matter

Experts Input

Deals by 

Country

Deals by 

Country in 

Related NAIC 

code

List Flagged for 

Further 

Investigation

Analyze

Report

NS NS

NS

NS

S

S

Validation Loop

Number of 

Deals (%)

by Country 

of Interest

Number of 

Deals (%)

Defined by 

Industry

S
27

purposes of this report, the critical technology firms acquired by foreign interests were 

classified for review according to the 14 Critical Technology sectors identified for the 

2006 Report. 

Table 1-1 lists the 14 critical technology sectors, as defined for purposes of this report 

and the preceding 2006 Report. The 14 sectors are further sub-divided by specific 

technology and assigned a relevant NAICS and/or SIC code. Appendix A on page 40 

provides the detailed sub-divided mapping of the technologies and their assigned 

NAICS/SIC codes for each sector. 

Critical Sectors List 

1. Advanced Materials and Processing 

2. Chemicals 

3. Advanced Manufacturing 

4. Information Technology 

5. Telecommunications 

6. Microelectronics 

7. Semiconductor Fabrication Equipment 

8. Electronics: Military Related 

9. Biotechnology 

10. Professional and Scientific Instruments 

11. Aerospace and Surface Transportation 

12. Energy 

13. Space Systems 

14. Marine Systems 

Table 1-1. Critical Sectors List 

Treasury searched the Thomson database and identified 1,073 deals (proposed M&A 

transactions7) across all NAICS or SIC codes defined in the Critical Technologies List. 

The deals were sorted by technology/NAICS code and by country and sent to the 

designated SMEs for review. Over the reporting period, investors from 57 countries 

were involved in critical technology M&A transactions, all of which were reviewed by 

the SMEs. 

The next step in the report process was to hold a series of telephone conference calls 

with the SMEs for each of the critical technology sectors. During these calls, SMEs 

had the opportunity to discuss any of the deals and to identify transactions for further 

analysis.8

 The identified deals were then subjected to further scrutiny and additional 

data were gathered and analyzed to see if patterns could be identified. The SMEs 

provided additional information from their respective agencies to help determine if a 

 

7

 Initially proposed transactions for which the offer was subsequently withdrawn and rumored 

transactions that the parties later disavowed were not included. 

8

 SMEs used technical expertise, counterintelligence information, and market segment knowledge to 

identify any practices that appeared to be outside of normal business practice. 
28 

deal was within normal business practices9 for a company or potentially part of a 

coordinated strategy. Through this process, SMEs identified 67 deals that warranted 

additional study and analysis. 

The SMEs identified limitations of the database including: 

• Publicly announced transactions – the database does not contain all 

M&A transactions proposed or completed by privately held companies, 

but only those that are publicly announced. SMEs partially addressed 

this shortcoming by including a number of transactions that were 

reviewed by CFIUS, but not publicly announced, in the list of transactions 

subjected to further scrutiny.10

• NAICS/SIC code assignment 

o The Thomson database is most easily searched for critical 

technologies using the primary six-digit NAICS code or 4-digit SIC 

code (in cases in which the technology did not have an assigned 

6-digit NAICS code) associated with the targeted company. This 

resulted in three difficulties with the resulting dataset: 

 NAICS codes at the 6-digit level and SIC codes at the 4-

digit level (which is the level used in the database) are 

more general than the specific technology of concern. A 

significant share of the 1,073 deals identified did not 

involve the acquisition of a critical technology company, but 

rather a company producing another product that falls into 

the same general industry classification as the critical 

technology of interest. 

 A company may associate itself with many NAICS or SIC 

codes, but only the primary code was searched to obtain 

the deals most likely to have affected the technology in 

question. Additionally, a company’s primary NAICS or SIC 

code may change over time but not be changed in the 

database. This means it is possible that transactions 

involving critical technologies were never included in the 

dataset for review. 

• Transaction Value – Nearly half of the completed deals did not contain 

transaction value information, therefore making it difficult to derive 

 

9

Among a number of factors evaluated, normal business practices were considered to be practices that 

appeared to be based on rational commercial considerations. A “normal business practices” transaction 

would be one in which a company acquires another company operating in the same or complementary 

markets. An example of something “outside of normal business practices” would be a company buying 

another company with products or technology in completely unrelated markets and that did not reflect 

strategic revenue considerations such as counter-cyclical sales volumes, i.e., a company with revenues 

that typically rise when the other company’s market may experience downturns. 10Comprehensive data on transactions among privately held companies are not available in any 

database. While the BEA collects this type of information as required by law for statistical purposes, 

statutory restrictions on the disclosure of company proprietary information precluded access to that 

database. 
29

statistics based on transaction value. Transaction value is a commonly 

used indicator in the economic analysis of foreign direct investment. 

1.3 Report Participants 

Departments and agencies that participated in the development of this section of the 

report were: 

• Department of Commerce 

• Bureau of Industry and Security 

• International Trade Administration 

• National Institute of Standards and Technology 

• National Telecommunications Information Administration 

• Department of Defense – Defense Technology Security Administration 

• Department of Justice 

• Federal Bureau of Investigation 

• Committee on Foreign Investment in the United States 

(CFIUS)/Federal Communications Commission (FCC) Unit 

• Counterintelligence Division 

• Department of State 

• Bureau of Economic and Business Affairs 

• Bureau of Intelligence and Research 

• Bureau of International Security and Nonproliferation 

• Department of the Treasury - Office of Investment Security 

• Director of National Intelligence 

• Office of the National Counterintelligence Executive/Community 

Acquisition Risk Section 

• National Intelligence Council 

• Executive Office of the President 

• Council of Economic Advisors 

• National Security Council 

• Office of Science and Technology Policy 
30 

2 EXTENT OF FOREIGN DIRECT INVESTMENT IN CRITICAL 

TECHNOLOGY INDUSTRIES 

2.1 Key Foreign Direct Investment Finding 

The key finding is: 

Overall, foreign firms are neither concentrating their investment solely in critical 

technology areas nor taking an increasingly dominant position in the overall 

development or production of U.S. critical technologies. 

2.2 Have Foreign Firms Concentrated their Investment in Critical Technology 

Industries? 

The available data indicate that while foreign firms have increased their investment in 

U.S. critical technology industries in recent years, foreign investors have not focused 

exclusively on critical technology industries. As of the end of 2006, 23 percent of the 

stock of total foreign direct investment in the United States was in industries that 

include critical technologies, up from 19 percent in 1997.11 However, the share of 

value added by foreign-owned firms in industries that include critical technologies rose 

less sharply, from 22 percent of all value added by all foreign-owned U.S. firms in 

1997 to 23 percent in 2005.12 Similarly, the share of employment by foreign-owned 

firms in industries that include critical technology sectors increased from 19 percent of 

all employment by U.S. affiliates of foreign firms in 1997 to 21 percent in 2005. 

2.3 Foreign-Owned Affiliates’ Share of U.S. Critical Technology Industries 

There is only limited evidence to suggest that foreign-owned firms are taking a growing 

or dominant position in U.S. critical technology industries as a whole. U.S. affiliates of 

foreign firms accounted for 10 percent of value added by all firms in the U.S. industries 

that include critical technologies in 2002, up from 8 percent in 1997. And employment 

at U.S. affiliates of foreign firms in critical technology industries was 12 percent of total 

U.S. employment in those industries in 2005, unchanged from the 12 percent share in 

1997. 

The importance of foreign-owned affiliates in specific U.S. critical technology industries 

varies. The specific critical technology-related industry with the largest employment by 

U.S. affiliates of foreign firms in 2005 was “pharmaceuticals and medicines 

manufacturing,” with 145,000 employees. The critical technologies-related industry 

 

11Foreign investment in critical technology industries was computed from BEA estimates of the foreign 

direct investment position in the United States on a historical-cost basis. BEA’s data on the direct 

investment position, employment, and value added of foreign-owned U.S. firms discussed in this section 

do not allow precise calculations of foreign investment in critical technology industries. The BEA data 

were classified by industry at roughly the four-digit industry level in the NAICS. At this level of 

classification, BEA totals for a number of industries combine data for critical technology industries with 

data for other industries, while other industries that were not designated as critical technology industries 

may include critical technology components that cannot be separately identified. As a result, the 

estimates presented here should be regarded as approximations of foreign direct investment in critical 

technology industries, rather than precise measures. 

12Not all of the BEA data cited in this section are available for all years. The differing start or end dates 

cited here reflect the most recent available data for the measure cited. 
31

with the next-largest amount of U.S. employment by foreign-owned companies was 

medical equipment and supplies, with 118,000 employees in 2005. 
32 

3 WHETHER THERE IS CREDIBLE EVIDENCE OF A COORDINATED 

STRATEGY TO ACQUIRE CRITICAL TECHNOLOGY COMPANIES 

3.1 Key Coordinated Strategy Findings 

The key finding is: 

There is no credible evidence of a widespread coordinated strategy among foreign 

governments or corporations to acquire critical U.S. technologies through the use 

of foreign direct investment. 

Of the 1,073 deals (proposed M&A transactions)13 identified across all NAICS and SIC 

codes defined in the Critical Technologies List, 56 individual companies and a total of 

67 individual proposed deals were identified by the SMEs for additional study and 

analysis. 

The report team did not find sufficient evidence to conclude that any individual 

company had a coordinated strategy, or was acting on a coordinated strategy on 

behalf of its respective government. 

3.2 Summary of Foreign M&A Activity in the United States 

Table 3-1 lists the foreign companies most active in completing deals (4 or more) 

involving U.S. critical technology firms during the period of this report (2006-2007). Of 

note is the fact that only four of the companies on the list were also listed as most 

active during the period covered by the previous report (1993-2005): Thomson 

Corporation of Canada had 10 mergers with or acquisitions of U.S critical technology 

companies during the period, compared to 18 during the previous period; Siemens AG 

of Germany had eight deals during the period, compared to 15 during the previous 

period; Nokia of Finland had seven deals during the period, compared to 15 during the 

previous period; and Koninklijke Phillips of the Netherlands had four deals during the 

period, compared to 14 during the previous period.14

 

13This section focuses on completed deals rather than proposed deals to give an accurate historical 

account of technologies that may have been acquired by foreign governments within the period of the 

report. There were a number of proposed deals that were never completed for a variety of reasons. 14It is possible that some parent companies were more active than shown in table 3-2, if Thomson listed 

the acquirer as a subsidiary with a different name from that of the parent company. 
33

Acquiror Name Country

Number of 

Acquisitions

Thomson Corp Canada 10

RAB Capital PLC United Kingdom 10

Harris Computer Systems Canada 8

SAP AG Germany 8

Siemens AG Germany 8

Reed Elsevier NV United Kingdom 8

Nokia Finland 7

Essilor International SA France 7

Accenture Ltd Bermuda 6

Wolters Kluwer NV Netherlands 6

Roche Holding AG Switzerland 6

Laird Group PLC United Kingdom 5

Stantec Inc Canada 4

Sonepar USA France 4

Bayer AG Germany 4

CDC Software Hong Kong 4

Sony Japan 4

Koninklijke Philips Electronic Netherlands 4

Jobserve Ltd United Kingdom 4

Pearson PLC United Kingdom 4

United Business Media PLC United Kingdom 4

WPP Group PLC United Kingdom 4

Table 3-1. Foreign Companies Most Active in Acquiring U.S. Critical Technology Firms 

(January 2006 – December 2007) 

The 1,073 proposed or completed foreign mergers with or acquisitions of U.S. critical 

technology companies examined for this report involved acquirers from 57 countries. 

Of those 57 countries, 51 countries’ investors completed 869 transactions.15 The M&A 

activity was dominated by investors from five countries (in order by number of 

acquisitions): the United Kingdom (U.K.), Canada, Japan, Germany, and France. 

Appendix B provides a detailed evaluation of each of the top five countries by number 

of deals, plus India. Together, acquisitions by investors from those six countries 

accounted for 569 of the 869 completed mergers with or acquisitions of U.S. critical 

technology companies, or 65 percent of the total. 

Germany, the United Kingdom, France, and Japan were the four largest foreign 

acquiring countries of U.S. critical technology companies in terms of value. As shown 

in Table 3-2, although the United Kingdom was the home country to the acquirers of 

the most U.S. critical technology companies by number, German acquirers ranked first 

in terms of value. Canada ranked eighth in value, although it was ranked second in 

 

15Investors from six countries were involved in proposed deals not listed as completed in the Thomson 

database — the Czech Republic, Guatemala, Lebanon, Mauritius, Pakistan, and Thailand. 
34 

terms of number of deals. The discrepancy between deal numbers and deal value by 

country reflects the difference in the reported values of the transactions. Overall, the 

Thomson database listed values for 52 percent of the completed mergers with or 

acquisitions of U.S. critical technology companies by all foreign investors, with an 

average reported value of $183 million. In comparison, Thomson reported values for 

54 percent of the acquisitions by investors from Canada, with an average reported 

transaction value of $33 million.16

Country Number of 

Deals

Deal Value 

($mn)

United Kingdom 203 28,404

Canada 170 5,563

Japan 58 11,764

Germany 55 36,125

France 49 20,050

India 34 1,416

Netherlands 34 9,731

Switzerland 31 8,603

Australia 28 3,267

Israel 22 1,103

Table 3-2. Transactions & Deal Value by Country 

Figure 3-1 provides additional detail on the breakdown of reported deal value by 

country.17 

Value of Completed Transactions, Percent by Country

Germany, 23%

United Kingdom, 18%

France, 13%

Japan, 7%

Saudi Arabia, 7%

Netherlands, 6%

Switzerland, 5%

Canada, 3%

Italy, 3%

Other, 14%

Figure 3-1. Total Value of Completed Transactions by Country 

 

16 We would also note that there have been a number of recent M&A transactions in the U.S. steel 

sector, including by Russia. We further note that steel is not considered a critical technology and that 

market share remains widely diversified. 

17 Actual aggregate deal value by country likely exceeds the values reported here, given the large 

number of transactions with no reported value in the Thomson database. 
35

As shown in Figure 3-2 the information technology sector had the most M&A activity of 

all the critical technology sectors. 

Figure 3-2. Completed Transactions by Technology and Year 

The data can also be analyzed by dividing it into four regions: 1) Europe,18 2) Canada, 

Australia, and New Zealand, 3) East Asia,19 and 4) other remaining countries. Figure 

3-3 displays the data by region for the 2006-2007 period. European investors 

accounted for more than half of all transactions by value, with investors from the 

Canada/Australia/New Zealand region accounting for 23 percent. Figure 3-4 provides 

additional historical context. 

 

18 For this report, “Europe” refers to the European Union’s 27 member states plus Switzerland, Norway, 

and Iceland. 

19 For this report, the term “East Asia” includes China, Hong Kong, Indonesia, Japan, Malaysia, 

Philippines, South Korea, Taiwan, and Vietnam. 

Completed Foreign Deals of U.S. Companies by Technology and Year

0

50

100

150

200

250

300

350

400

450

500

2006 2007

Telecommunications

Space Systems

Semiconductor Fabrication Equipment

Professional Scientific Instruments

Military Related Electronics

Microelectronics

Marine Systems

Information Technology

Energy

Chemicals

Biotechnology

Aerospace and Surface Transportation

Advanced Manufacturing

Adv Material & Process
36 

Figure 3-3. Completed Foreign Deals in Critical Technologies, by Region 

Completed Foreign Deals of U.S. Companies in Critical Technologies, 

by Technology and Year

0

100

200

300

400

500

600

700

1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

Number of Transactions

Can-Aust-NZ East Asia Europe Other

Data 

used in 

this 

Report

Data used in 2006 Quadrennial Report

Figure 3-4. Regional Breakdown of Transactions, 1994-2007 

Figure 3-5 shows the regional breakdown of activity by number of deals in each sector. 

European investors were the most active acquirers of U.S. critical technology 

companies in each of the 14 sectors except marine systems, which had only three 

transactions during the report period. 

East Asia

12%

Europe

54%

Other

11% Canada, 

Australia and 

New Zealand 

23%

Region Total 

Deals

Can-Aust-NZ 203

East Asia 100

Europe 469

Other 97
37

Completed Foreign Deals of US Companies in Critical Technologies, by Technology and Region

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Adv Material & Process

Advanced Manufacturing

Aerospace and Surface Transportation

Biotechnology

Chemicals

Energy

Energy

Information Technology

Marine Systems

Microelectronics

Military Related Electronics

Professional Scientific Instruments

Semiconductor Fabrication Equipment

Space Systems

Telecommunications

Europe

East Asia

Can-Aust-NZ

Other

Figure 3-5. Completed Transactions by Region within Each Sector 

Appendix C provides detailed trends by industry and country. 
38 

4 WHETHER FOREIGN GOVERNMENTS USED ESPIONAGE 

ACTIVITIES TO OBTAIN COMMERCIAL SECRETS RELATED TO 

CRITICAL TECHNOLOGIES

4.1 Key Espionage Finding20

Although there is no evidence of a widespread coordinated strategy to obtain U.S. 

critical technologies through foreign direct investment, there is significant evidence that 

foreign governments are involved in other efforts to acquire such technologies.21

4.2 The “Asymmetric” Foreign Intelligence Threat 

Foreign government entities—including intelligence organizations and security 

services—have learned to capitalize on private-sector technology acquisitions. Some 

governments have established quasi-official organizations, either in the United States 

or in their home countries, to facilitate contact with overseas scientists, engineers, and 

businessmen. These organizations enable foreign government officials to directly 

gauge the level of access that various foreign experts have, or may gain, to sensitive 

U.S. technology. The identified experts can be approached for sensitive information 

when they return to their home countries, thereby avoiding the need for meetings in 

the United States that could fall under the watchful eyes of the U.S. law enforcement 

community. 

 

20 Economic espionage is used here as defined 18 U.S.C. § 1831. 21 For additional information, see, “The Annual Report to Congress on Foreign Economic Collection and 

Industrial Espionage, 2006,” and the classified version of this report. 
39

APPENDIX A – CRITICAL TECHNOLOGIES 

The critical technologies identified for this report have been categorized into 14 

sectors and assigned an SIC or NAICS code. Those with no code association 

were technologies or sectors for which no appropriate code exists. See Table A-1 

(below). 

SIC NAICS 1 Advanced Materials and Processing 

3313 331112 1.1 Processes for Super Alloys, Polymers, etc. 

2899 3259 1.2 Semiconductor Materials 

3299 327112 1.3 Ceramics 

2821 325211 1.4 Fiber-reinforced Composites and Metal Matrix Composites 

3341 331314 1.5 Super Alloys 

3087 325991 1.6 Polymeric Materials, Plastic Fabricators, Homogenous Injections, Extrusions, etc. 

2892 3259 1.7 Energetic Materials (explosives, propellants, etc.) 

8731 541710 1.8 Metamaterials (nanostructures with special properties) 

 

SIC NAICS 2 Chemicals 

2.1 Chemical Defense Systems 

3829 339112 2.2 Chemical Detection, Warning, and Identification 

 2.3 Obscurants 

 

SIC NAICS 3 Advanced Manufacturing 

3823 334513 3.1 Industrial Automation, Robotics 

3823 334513 3.2 Industrial Measurement and Sensing Equipment 

3.3 Process Control Equipment and Systems 

3823 334513 3.3.1 5-axis or more Motion Controllers 

3823 334513 3.3.2 5-axis or more Contouring Software 

3823 334513 3.3.3 Coating Deposition Controllers 

3.4 Micro and Nanofabrication (nanotech) 

3559 333295 3.4.1 Fabrication Equipment – Nano-manipulation Equipment 

3827 333314 3.4.2 Nano-imaging Equipment 

3827 333314 3.4.2.1 Scanning Electron Microscopes 

3827 333314 3.4.2.2 Scanning Tunneling Microscopes 

3827 333314 3.4.2.3 Other Imaging Equipment 

3559 333295 3.5 Polymeric Composite Processing Equipment or Technology 

3544 333511 3.6 Precision Super Alloy Investment Casting 

 3.7 Rapid Prototyping / Additive Material Manufacturing (especially metals) 

3549 333518 3.7.1 Laser Sintering 

3549 333518 3.7.2 Ultrasonic Consolidation 

3549 333518 3.7.3 E-beam Sintering 

 3.8 Non-destructive Inspection Equipment (aircraft composite testing) 

3829 339112 3.8.1 Ultrasonic Tools Having 3 or more Axes of Motion 

3844 334517 3.8.2 X-ray Tomography Inspection Tools 

 3.9 High Precision Machine Tools 

3542 333513 3.9.1 Lathes 2-axes or more with < 4 Micron Positioning Accuracy 

3542 333513 3.9.2 Mills 5 axis or more with <4 Micron Positioning Accuracy 

3542 333513 3.9.3 Grinders 5 axis or more with < 4 Micron Positioning Accuracy 

3542 333513 3.9.4 Any Tools with < 2 Micron Positioning Accuracy 

 3.10 Composite Production Equipment (aircraft, missile, nuclear applications) 

3549 333518 3.10.1 Filament Winders 

3549 333518 3.10.2 Fiber Placement Tools 

3549 333518 3.10.3 Tape Laying Tools 

3549 333518 3.10.4 Composite Weaving Tools 
40 

 

SIC NAICS 4 Information Technology 

 4.1 Computers and software 

3571 334111 4.1.1 Electronic Computers 

3575 334113 4.1.2 Computer Terminals 

7372 5112 4.1.3 Prepackaged Software 

7375 518110 4.1.4 Internet Service Providers and Web Search Portals 

7374 518210 4.1.5 Data Processing Services, Hosting 

7371 541511 4.1.6 Computer Programming Services 

8243 61142 4.1.7 Data Processing Schools 

7373 541512 4.2 Computer Graphics and Scanning, CAD/CAM, CAE systems 

7373 541512 4.3 Computer Simulation and Modeling 

3577 334119 4.4 Peripherals 

3572 334112 4.5 Data Storage 

 

SIC NAICS 5 Telecommunications 

4813 517110 5.1 Telecommunications Carriers 

 5.2 Internet Router Equipment and Software 

3661 334210 5.2.1 Routers 

3661 334210 5.2.2 Voice-over-Internet-Protocol 

3661 334210 5.3 Digital Telephone Switches and Software 

3661 334210 5.4 Digital Transmission Equipment and Software 

3663 334220 5.5 Communications Satellites 

 5.6 Radio Communications Equipment and Software 

3661 334210 5.6.1 Novel Modulation Techniques 

3661 334210 5.6.2 Software-defined Radio (SDR) 

 5.7 Digital Cryptographic Hardware and Software 

3661 334210 5.7.1 Internet Firewall/Access Control Systems and Software 

3661 334210 5.7.2 Novel Techniques 

3661 334210 5.8 Telecommunications Test Equipment 

3812 334310 5.9 Passive Radiolocation/ Emitter Measurement/ Targeting Systems 

4812 513322 5.10 Wireless Data 

 5.11 Satellite Communications 

4899 517410 5.11.1 Satellite Telecommunication Carriers 

4899 517410 5.11.2 Satellite Telecommunications 

 

SIC NAICS 6 Microelectronics 

3674 334413 6.1 Semiconductors 

3672 334412 6.2 Bare Printed Circuit Boards 

6.3 Hardened Electronics 

 

SIC NAICS 7 Semiconductor Fabrication Equipment 

3559 333295 7.1 Semiconductor Fabrication Equipment 

3674 334413 7.2 Semiconductor Wafers 

3825 334515 7.3 Automated Test Equipment 
41

 

SIC NAICS 8 Electronics: Military Related 

3699 333618 8.1 Electronic Warfare Systems, Subsystems, or Components 

3812 334310 8.2 Identification Equipment 

3663 334220 8.3 Communications Systems, Subsystems, or Components 

3571 334111 8.4 Computers Specifically Built or Modified for Military Applications 

3812 334310 8.5 Radar Systems 

3812 334310 8.6 Sensors (optical, RF, infrared, acoustic) 

8.7 Navigation 

3812 334310 8.7.1 Inertial Navigation Systems and Components 

3812 334310 8.7.2 Global Positioning Systems, Components, and Technology 

3812 334310 8.7.3 Gravity Meters and Gravity Gradiometers 

3812 334310 8.7.4 Radio and Data-based Referenced Navigation Systems 

3812 334310 8.7.5 Magnetic and Electromagnetic Sensor Systems 

3679 334419 8.8 Monolithic Microwave Integrated Circuit (MMIC) Power Amplifiers 

3679 334419 8.9 Traveling Wave Tubes and Microwave Power Modules 

3571 334111 8.10 Cryptographic Systems or Components 

3569 333999 8.11 Battlefield Robotics 

 

SIC NAICS 9 Biotechnology 

2836 325414 9.1 Human, Animal, Agricultural and Industrial Biotechnology 

8733 541710 9.2 Biotech Research and Production Equipment 

2835 325413 9.3 Medical Diagnostics 

 9.4 Pharmaceuticals 

2833 325411 9.4.1 Medicinal and Botanical Manufacturing 

2834 325412 9.4.2 Pharmaceutical Preparation Manufacturing 

 9.5 Genetic Engineering 

2836 325414 9.5.1 Bacterial Agents 

2836 325414 9.5.2 Viral Pathogens 

 

SIC NAICS 10 Professional/Scientific Instruments 

3845 334510 10.1 Laser Related Equipment 

3826 334516 10.2 Analytical and Scientific Instrumentation 

 10.3 Advanced Medical Equipment 

3844 334517 10.3.1 Irradiation Apparatus Manufacturing 

3841 339112 10.3.2 Surgical and Medical Instrument Manufacturing 

3842 339113 10.3.3 Surgical Appliance and Supplies Manufacturing 

3843 339114 10.3.4 Dental Equipment and Supplies Manufacturing 

3851 339115 10.3.5 Ophthalmic Goods Manufacturing 

 

SIC NAICS 11 Aerospace and Surface Transportation 

3721 541710 11.1 Commercial Air Vehicle Products 

3721 541710 11.2 Military Air Vehicle Products 

3724 541710 11.3 Gas Turbine Engine Products, Manufacturing and Controls 

3721 541710 11.4 Air Vehicle/Airframe/Gas Turbine Engine Design Technologies 

3711 336992 11.5 Surface Transportation Technologies 

7371 541511 11.6 Systems Integration Technologies 
42 

 

SIC NAICS 12 Energy 

 12.1 Integrated Energy and Power Systems 

4911 221111 12.1.1 Hydroelectric Power Generation 

4911 221113 12.1.2 Nuclear Electric Power Generation 

4911 221119 12.2 Energy Conversion and Power Generation 

1381 213111 12.3 Energy Storage 

 12.4 Power Conditioning, Control, and Distribution 

4911 221121 12.4.1 Electric Power Control 

4911 221122 12.4.2 Distribution of Electric Power 

 

SIC NAICS 13 Space Systems 

3663 334220 13.1 Space Avionics and Autonomy 

3571 334111 13.2 Electronics and Computer Technologies for Space 

3761 541710 13.3 Space Launch Vehicles 

3229 327212 13.4 Space Optics 

3822 334512 13.5 Power and Thermal Management 

3764 541710 13.6 Launch Propulsion for Space Systems 

3764 541710 13.7 Propulsion for Space Systems 

3812 334310 13.8 Space Sensor Systems 

8711 541330 13.9 Space Survivability 

3663 334220 13.10 Space Communication/Connectivity with Ground Controls, User Platforms and Other 

Customer Systems 

3845 334510 13.1 Space-Based Laser Technologies 

8711 541330 13.1 Space Systems Engineering and Design Tools 

 

SIC NAICS 14 Marine Systems 

4499 488330 14.1 Ocean Salvage 

3699 333618 14.2 Propulsion 

8711 541330 14.3 Signature Control and Survivability 

3731 336611 14.4 Undersea Vehicles 

3731 336611 14.5 Advanced Hull Forms 

Table A-1. Critical Technologies List
43

APPENDIX B – M&A TRANSACTIONS: COUNTRY-BY-COUNTRY 

EVALUATION 

The report team reviewed 1,073 proposed or completed mergers with or acquisitions of 

U.S. companies in industries with critical technology capabilities during the report period 

involving investors from 57 countries. Of those, investors from 51 countries completed 

869 deals. Just under 62 percent of the completed deals were with investors from five 

countries, as shown in Table B-1: the United Kingdom (23 percent), Canada (20 

percent), Japan (7 percent), Germany (6 percent), and France (6 percent). This 

appendix reviews the transactions involving those countries in greater detail, plus the 

transactions involving Indian investors (4 percent). 

Country Number of Acquisitions % of Total Cumulative % 

United Kingdom 203 23% 23% 

Canada 170 20% 43% 

Japan 58 7% 50% 

Germany 55 6% 56% 

France 49 6% 62% 

India 34 4% 65% 

Table B-1. Foreign Countries Most Active in Completed Acquisitions of U.S. Critical Technology 

Firms 

The top five countries followed the overall trend across critical technology sectors as 

evidenced in Figure B-1 with information technology (IT) representing the largest 

number of deals from each country. The United Kingdom or Canada had the largest 

number of completed deals in each sector except for Advanced Materials, where 

Japanese investors had the largest number of deals with seven, and Semiconductor 

Fabrication Equipment. 
44 

Advanced Materials

Advanced Manufacturing

Aerospace/Surface

Transport

Biotechnology

Chemicals

Energy

Information

Technology

Marine

Systems

Microelectronics

Military

Electronics

Scientific Instruments

Semiconductor Fabrication

Space

Systems

Telecommunications

United Kingdom

Canada

Japan

Germany

France

India

0

10

20

30

40

50

60

70

80

90

100

Completed Foreign Deals of U.S. Companies in Critical Technologies, by Technology and Country Completed Transactions

Figure B-1. Completed Foreign Deals by Technology & Country 
45

Figure B-2 shows the M&A activity of each country as a percent of completed deals 

within each sector. 

Completed Foreign Deals of US Companies in Critical Technologies, by Technology and Country

0%

20%

40%

60%

80%

100%

Advanced Materials and

Processing

Chemicals

Advanced Manufacturing

Information

Technology

Telecommunications

Microelectronics

Semiconductor Fabrication

Equipment

Electronics

Military

Related

Biotechnology

Professional Scientific Instruments

Aerospace

and Surface Transportation

Energy

Space

Systems

Marine Systems

Other

Canada

United Kingdom

Japan

Germany

France

Figure B-2. Completed Foreign Deals by Country in Each Sector 

B.1 United Kingdom 

Summary of M&A activity in the United States: There were 203 completed mergers with 

or acquisitions of U.S. critical technology companies by U.K. investors between January 

1, 2006, and December 31, 2007. Of these, 107 were in the IT sector followed by 30 in 

the Biotechnology sector. The United Kingdom ranked first among foreign acquirers in 

IT and Biotechnology M&A transactions, the two sectors with the largest number of 

transactions, as well as in Chemicals, Advanced Manufacturing, Military Electronics, 

and Space Systems (tied with Canada). U.K investors also accounted for the second 

largest number of M&A transactions in Telecommunications and Advanced Materials, 

the sectors with the third and fourth largest number of deals, as well as in Energy M&A 

transactions. 

Evidence of government direction: The report team did not find credible evidence 

demonstrating a coordinated strategy on the part of the Government of the United 

Kingdom to direct its firms to acquire U.S. companies with critical technologies. In 

addition, the strong political and economic relationship, including the extensive two-way 

sharing of even the most sophisticated technologies, tends to make such activity 
46 

unnecessary and, if discovered, potentially counterproductive. This general 

assessment has not changed since the 2006 report. 

Evidence of private sector strategy: U.K. investors were the most active acquirers of 

U.S. critical technology companies – accounting for 23 percent of completed deals. 

Nevertheless, the report team did not find any credible evidence demonstrating a 

widespread coordinated strategy. U.K. firms have historically been active in the U.S. 

market; M&A transactions, joint ventures, and strategic alliances between U.S. and U.K. 

firms are common. 

Specific U.K. companies making the most deals include: RAB Capital PLC (10), Reed 

Elsevier NV (8), and Laird Group PLC (5). 

Rab Capital PLC is an investment company with $6.3 billion under management. 

All 10 of its deals are described in the Thomson database as “undisclosed 

minority investments.” 

Reed Elsevier NV, the owner of LexisNexis Group and various publishing and 

data management services, acquired a number of software and online service 

companies. 

Laird Group PLC, a technology company, acquired a range of U.S. 

manufacturers in the electronics and related sectors. 

B.2 Canada 

Summary of M&A activity in the United States: Canadian investors completed 170 

mergers with or acquisitions of U.S. critical technology companies between January 1, 

2006, and December 31, 2007. Of these, 86 were in the IT sector followed by 18 in the 

Telecommunications sector and 13 in the Energy sector. Canada ranked first among 

foreign acquirers in Telecommunications and Microelectronics M&A transactions, the 

third and fifth largest sectors by number of deals, as well as in Energy, Space Systems 

(tied with the United Kingdom), and Scientific Instruments. Canadian investors also 

accounted for the second largest number of transactions in Information Technology, 

Biotechnology, and Military Electronics 

Evidence of government direction: The report team did not find credible evidence 

demonstrating a coordinated strategy on the part of the Government of Canada 

directing its firms to acquire U.S. companies with critical technologies. In addition, the 

strong political and economic relationship, including the extensive two-way sharing of 

even the most sophisticated technologies, tends to make such activity unnecessary 

and, if discovered, potentially counterproductive. This general assessment has not 

changed since the last report. 

Evidence of private sector strategy: The report team did not find any credible evidence 

demonstrating a coordinated strategy. Although Canadian firms were active acquirers 

of U.S. critical technology companies – accounting for 20 percent of completed foreign 
47

M&A transactions, the deals tended to be smaller than average and involved a large 

number of Canadian acquirers each making a small number of deals. As noted in 

Section 3.2, the average Canadian acquisition had a reported value of $33 million, 

compared to $183 million on average overall. In addition, 124 different investors were 

involved in Canada’s 170 acquisitions in those sectors. 

Specific companies doing the most deals were Thomson Corporation (10) and Harris 

Computer Systems (8). 

Thomson Corporation provides integrated information services to business and 

professional customers worldwide. It operates in four segments: Thomson Legal 

and Regulatory, Thomson Learning, Thomson Financial, and Thomson Scientific 

and Healthcare. It operates in Canada, the United States, Europe, Asia-Pacific 

and other countries. 

Harris Computer Systems is a software and technology services company with 

offices in Canada and the United States. The company’s primary customers are 

municipalities, schools, and utility companies. 

B.3 Japan 

Summary of M&A activity in the United States: Japanese investors completed 58 

mergers with or acquisitions of U.S. critical technology companies between January 1, 

2006, and December 31, 2007. Of these, 23 acquisitions were in the IT sector. Japan 

ranked first among foreign acquirers in Advanced Materials M&A transactions, with 

seven deals, and second in Energy M&A transactions, with eight.

Evidence of government direction: The report team did not find credible evidence 

demonstrating a coordinated strategy on the part of the Japanese Government to direct 

its firms to acquire U.S. companies with critical technologies. However, the group was 

able to find evidence of Japanese strategies to promote world-leading industries in 

certain sectors. The existence of the strategies could be one factor in explaining some 

of the Japanese activity. 

The Japanese Government declared the start of the broadband era (as of July 2001) 

with various high-speed network services spreading rapidly and expected to grow amid 

decreasing broadband service fees. The “IT New Reform Strategy” was announced in 

2006 as the new national strategy to maintain Japan’s position as the most advanced 

information and communications technology (ICT) nation. The 2007 White Paper from 

the Japanese Ministry of Internal Affairs and Communications (MIC) reports that the 

country’s internet penetration rate stood at 68.5 percent in 2006, with 26.4 million 

broadband contracts that year. Some evidence suggests that the Japanese 

Government may be involved in other similar initiatives in which the government 

subsidizes private industries to help them attain national strategic levels. The broad 

goal is to become the “world’s leading nation for ubiquitous network society” by 2010.22

 

22 “Japan: Tokyo Announces ICT Strategy for FT2008 Stressing Ubiquitous Platform,” Tokyo Nikkan 

Kogyo Shumbun, in Japanese 20070802, retrieved through FBIS. 
48 

In August 2007, the MIC announced its FY 2008 priority technology strategy, which is 

aimed at strengthening the international competitiveness of Japan’s ICT industry. The 

MIC strategy selected seven priority R&D themes that include "the ubiquitous platform," 

from which network connections can be made anywhere and at any time, and 

"ultrahigh-definition video technology." The strategy calls for Japan to allocate 

generous budgets for those R&D themes and to support R&D through measures that 

promote cooperation among industry, universities, and government.23

Additionally, the Energy Committee of the Ministry of Economy Trade and Industry 

announced in 2006 "The New National Energy Strategy," which established policy 

targets to be accomplished by 2030. The sixth and seventh major points of the strategy 

are most applicable to this report: 

“6) To strengthen international cooperation particularly in Asia by promoting 

transfers of know-how and technology in areas such as energy conservation, 

environmental protection and oil stockpiling. 

7) To encourage technological innovation in alternative energy and energy 

conservation technologies such as Fuel Cell, GTL [i.e., gas-to-liquid technology] 

and DME [i.e., dimethyl ethyl technology], etc. These targets are certainly very 

challenging, but we need to do our utmost to achieve them.”24

Evidence of private sector strategy: Japanese firms accounted for nine percent of 

proposed foreign M&A transactions involving U.S. critical technology companies. The 

report team did not find any credible evidence demonstrating a coordinated strategy of 

acquiring U.S. companies. Japan was not an M&A leader in any of the fourteen critical 

technology areas. 

No Japanese company made more than four acquisitions of U.S. critical technology 

companies during the reporting period. 

B.4 Germany 

Summary of M&A activity in the United States: German investors completed 55 

mergers with or acquisitions of U.S. critical technology companies between January 1, 

2006, and December 31, 2007. Of these, 19 were in the Information Technology sector. 

Germany ranked second among foreign acquirers in Biotechnology with 12 deals and in 

Microelectronics with five.

Evidence of government direction: The report team found no credible evidence 

demonstrating a coordinated strategy on the part of the German Government directing 

its firms to acquire U.S. companies with critical technologies. 

 

23 “Japan: Tokyo Announces ICT Strategy for FY 2008 Stressing Ubiquitous Platform,” Tokyo Nikkan 

Kogyo Shumbun, in Japanese 20070802, retrieved through FBIS. 

24 “Japan’s New National Oil Strategy Explained at International Conference,” Tokyo Institute of Energy 

Economics, Japan; 20060706. 
49

Evidence of private sector strategy: German firms accounted for 6 percent of 

completed foreign mergers with or acquisitions of U.S. critical technology companies. 

The report team found no credible evidence demonstrating a coordinated strategy. 

German firms have historically been active in the U.S. market; M&A transactions, joint 

ventures, and strategic alliances between U.S. and German firms were not unusual. 

Siemens AG and SAP AG were among the most active companies in acquiring U.S. 

critical technology companies, with 8 deals each. 

Siemens AG’s activities are carried out through eight main business segments. 

The Information and Communications segment offers IT solutions and services for 

the private and public sectors. The Automation and Control segment supplies 

products, systems solutions, and services for industrial and building automation. 

The Power segment offers energy solutions. The Transportation segment 

supplies products and systems for railway and automotive industries. The Medical 

segment provides products, solutions, services, and consulting for the healthcare 

community. The Lighting segment provides lighting sources, electronic control 

gear, and light management systems. The Financing services area offers financial 

solutions in the areas of financing, investment, treasury, and fund management. 

The Real Estate area manages, develops, buys, and sells real estate. 

SAP AG provides business software applications and services to customers 

worldwide 

B.5 France 

Summary of M&A activity in the United States: French investors completed 50 mergers 

with or acquisitions of U.S. critical technology companies between January 1, 2006, and 

December 31, 2007. Of these, 24 deals were in the IT sector followed by the Scientific 

Instruments sector with 12. 

Evidence of government direction: The report team found no credible evidence 

demonstrating a coordinated strategy on the part of the French Government directing its 

firms to acquire U.S. critical technology firms. 

Evidence of private sector strategy: French firms accounted for 6 percent of the 

completed foreign mergers with or acquisitions of U.S. critical technology companies. 

The report team found no credible evidence demonstrating a coordinated strategy. 

French firms have historically been active in the U.S. market; M&A transactions, joint 

ventures, and strategic alliances between U.S. and French firms are common. 

Essilor International SA, a manufacturer of corrective lenses and other ophthalmic 

products, was the only French firm involved in more than four critical technology M&A 

transactions, with seven deals. 

B.6 India 

Summary of M&A activity in the United States: Indian investors completed 34 mergers 

with or acquisitions of U.S. critical technology companies between January 1, 2006, and 
50 

December 31, 2007. Of these, 21 were in the IT sector, followed by five deals in the 

Biotechnology sector. 

Evidence of government direction: The report team found no credible evidence 

demonstrating a coordinated strategy on the part of the Indian Government directing its 

firms to acquire U.S. critical technology firms. 

India has a National Biotechnology Strategy with a target of a $5 billion biotechnology 

industry by the year 2010.25 To that end, there was a higher concentration of 

acquisitions of biotechnology-related firms by Indian companies than previously 

identified. 

 

25 The National Science and Technology Policy of the Government of India and the Vision Statement on 

Biotechnology issued by India’s Department of Biotechnology have directed notable interventions in the 

public and private sectors to foster life sciences and biotechnology. 
APPENDIX C – CHARTS AND GRAPHS This appendix presents detailed charts of the annual, industry, and regional trends of the 869 completeU.S. companies in critical technology sectors announced between January 2006 and December 2007. the distribution of completed deals by country within each geographic region. The United Kingdom ha

number of deals among European countries, followed by Germany and France. Japan had the largest from East Asia. Of the remaining countries in other regions, India and Israel had the largest number o

Completed Foreign Deals of U.S. Companies in Critical Technologies 

Canada-Australia-New Zealand

Australia

14%

New Zealand

2%

Canada

84%

Number of Deals 203 East Asia

Hong Kong

8% Japan 57%

Singapore

11%

South Korea

7%

Taiwan

8%

Other

9%

Number of Deals 

Europe

Germany

12%

Netherlands

7%

Spain

3%

Sweden

5%

Switzerland

7%

United Kingdom

43%

Other

10%

NorwayPortugalLuxembourg

Italy

3%

IcelandIreland RepublicDenmark

France

11%

FinlandBelgiumAustria

Number of Deals 469 Other

India

34%

Other

17%

Israel

22%

South Africa

4%

Bermuda

9%

Bahrain

6%

United Arab 

Emirates

4%

Russian Federation

3%

Number of Deals 

Countries with transactionsArgentinaBrazilBritish Virgin IslaColombiaCosta RicaJerseyKazakhstaanKuwaitMexicoNetherlands AntSaudi ArabiaSerbia and MontSri LankaUkraineZimbabwe

Figure C-1. Completed Foreign Deals in Critical Technologies with Region Detail 
52 

Sector: Advanced Materials & Processing 

Australia

7%

Canada

9%

France

9%

Germany

10%

Japan

12%

Netherlands

9%

Switzerland

5%

United Kingdom

10%

Other

19%

Belgium

3%

India

3%

Italy

3%

Ukra

South 

Singa

Saudi New Z

Mexic

Malay

Israe

FinlanChina

Brazi

Numb

Figure C-2. Completed Foreign Deals in Advanced Materials and Processing 
Sector: Chemicals

Canada, 11%

Germany, 11%

Switzerland, 16%

United Kingdom, 21%

Other, 42%

AustraliaDenmarkIreland ReItaly

JapanNetherlaAntillesSingapoSweden

Number of D

Figure C-3. Completed Foreign Deals in Chemicals 
54 

Sector: Advanced Manufacturing

Canada, 11%

Germany, 11%

Other, 39%

SRJIIFA

United Kingdom, 39%

Numbe

Figure C-4. Completed Foreign Deals in Advanced Manufacturing 
Sector: Information Technology

Australia

2%

Canada

21%

France

6%

Germany

5%

India

5%

Israel

3%

Japan

6%

Netherlands

4%

United Kingdom

26%

Other

17%

Switzerland

3%

Sweden

2%

Couthan Arge

BahBelgBermChinCostFinlaHonIrelaItalyJersKuwMexNew NorwPhiliPortRusSingSoutSoutSpaTaiwVietnZimb

Numb

Figure C-5. Completed Foreign Deals in Information Technology 
56 

Sector: Telecommunications

Canada

31%

Germany

3%

Japan

9%

Sweden

7%

United Kingdom

22%

Other

24% Israel

3%

Spain

South 

South Singa

SerbiNetheItalyIndia

Hong 

FrancFinlan

DenmBritish Berm

Numb

Figure C-6. Completed Foreign Deals in Telecommunications 
Sector: Microelectronics

Canada

China 17%

4%

France

4%

Germany

11%

Israel

4%

Japan

6%

Netherlands

4%

Norway

4%

Switzerland

6% Taiwan

11%

United Kingdom

9%

Bahrain

4%

Other

9%

Singapore

6%

Sri LaSouth 

Denm

Austr

Numb

Figure C-7. Completed Foreign Deals in Microelectronics 
58 

Sector: Semiconductor Fabrication Equipment

Australia

32%

France

17%

Norway

17%

Sweden

17%

Taiwan

17%

Nu

Figure C-8. Completed Foreign Deals in Semiconductor Fabrication Equipment 
Sector: Military Related Electronics

Canada

25%

Japan

13%

United Kingdom

30%

UniteSinga

Norw

IndiaGermFrancFinlan

Berm

Other

34%

Numb

Figure C-9. Completed Foreign Deals in Military Related Electronics 
60 

Sector: Biotechnology

Canada

12%

France

3%

Germany

12%

Ireland-Rep

2%

Israel

2%

Japan

6%

Spain

2%

Sweden

2%

United Kingdom

30%

Other

8%

Belgium

2%

Switzerland

8%

Netherlands

4%

India

5%

Australia

3% South 

NorwaNew Z

Luxem

Italy

Hong 

DenmAustr

Numb

Figure C-10. Completed Foreign Deals in Biotechnology 
Sector: Professional and Scientific Instruments

Canada

22%

France

17%

Germany

10%

Italy

7%

Netherlands

7%

Sweden

7%

Switzerland

7%

United Kingdom

9%

Other

21%

South 

RussJapa

Icelan

DenmBraziBerm

Num

Figure C-11. Completed Foreign Deals in Professional/Scientific Instruments 
62 

Sector: Aerospace and Surface Transportation

Germany

25%

India

25%

United Ki

50%

N

Figure C-12. Completed Foreign Deals in Aerospace and Surface Transportation 
Sector: Energy

Australia

5%

Canada

29%

France

12%

Japan

16%

Spain

7% United Kingdom

19%

Other

14%

BaBeKaNePoUn

Numb

Figure C-13. Completed Foreign Deals in Energy 
64 

Sector: Space Systems

Australia

Canada 9%

30%

India

9%

United Kingdom

31%

UnSwSpNeGeFinCo

Other

20%

Numb

Figure C-14. Completed Foreign Deals in Space Systems 
Sector: Marine Systems

Australia

34%

United Kingdom

33%

United Arab Emirates

33%

Numb

Figure C-15. Completed Foreign Deals in Marine Systems 
66 

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APPENDIX D – Abbreviations and Acronyms 

BEA Bureau of Economic Analysis, Department of Commerce 

CFIUS Committee on Foreign Investment in the United States 

DNI Director of National Intelligence 

EAR Export Administration Regulations 

EMS Electronics Manufacturing Services 

FCC Federal Communications Commission 

GSM Global System for Mobile communications 

IT Information Technology 

ITAR International Traffic in Arms Regulation 

M&A Mergers and Acquisitions 

NAICS North American Industry Classification System 

NTT Nippon Telegraph and Telephone Corporation 

OECD Organization for Economic Co-operation and Development 

ONCIX Office of the National Counterintelligence Executive 

R&D Research and Development 

SIC Standard Industrial Classification 

SME Subject Matter Expert 

U.K. United Kingdom 

UMTS Universal Mobile Telecommunications Systems 

U.S. United States 

USG United States Government 

VoIP Voice-over Internet Protocol 
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