COMMITTEE ON 

FOREIGN INVESTMENT 

IN THE UNITED STATES 

ANNUAL REPORT 

TO CONGRESS 

Report Period: CY 2016 and CY 2017 

PUBLIC / UNCLASSIFIED VERSION 

CFIUS ANNUAL REPORT TO CONGRESS 

Report Period: CY 2016 and CY 2017 

D. Withdrawn Notices .................................................................................................................................. 22 

E. Mitigation Measures ................................................................................................................................ 24 

F. Perceived Adverse Effects of Covered Transactions .............................................................................. 26 

SECTION 11: CRITICAL TECHNOLOGIES ............................................................................... 30 

A Whether There ls Credible Evidence of a Coordinated Strategy to Acquire Critical Technology 

Companies ............................................................................................................................................ 31 

B. Whether Foreign Governments Used Espionage Activities to Obtain Commercial Secrets Related to 

Critical Technologies ............................................................................................................................. 33 

SECTION 111: FOREIGN DIRECT INVESTMENT IN THE UNITED STATES BY COUNTRIES 

THAT BOYCOTT ISRAEL OR DO NOT BAN TERRORIST ORGANIZATIONS ...................... 34 

I ntrod uctio n .................................................................................................................................................. 34 

A Summary of Findings and Conclusions of Study .................................................................................... 34 

B. Study Methodology ................................................................................................................................. 35 

C. Detailed Findings of Study ...................................................................................................................... 36 

APPENDIX ............................................................................................................................... 38 

B. Methodology and Data Sources Used to Assess Foreign Acquisitions of U.S. Critical Technology 

Companies ................................................................................................................................................. 38 
ii 
CFIUS member agencies include the Departments of Treasury (chair), State, Defense, Justice, Commerce, 

Energy, and Homeland Security; the Office of the United States Trade Representative; and the White 

House Office of Science and Technology Policy. The Office of the Director of National Intelligence and the 

Department of Labor are ex-officio members, and five White House offices are observers. As needed to 

assess the national security effects of a transaction, CFIUS involves other federal government agencies in 

its reviews, such as the Departments of Transportation, Health and Human Services, and Agriculture. 

CFIUS Process 

On August 13, 2018, the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA) was signed 

into law. FIRRMA makes various amendments and changes to the CFIUS review process and jurisdiction. 

Certain of the amendments and changes made by FIRRMA took effect immediately upon enactment of the 

statute, while others will take effect at a later date. This Annual Report covers transactions filed in calendar 

years 2016 and 2017, and thus describes the CFIUS process as it existed prior to the enactment of 

FIRRMA. 

Generally, prior to FIRRMA, parties voluntarily submitted notices of transactions to CFIUS. CFIUS also has 

the authority to review pending or completed transactions even absent a voluntary notice, if CFIUS 

determines that the transaction could raise national security concerns. 

Jn 2016 and 2017, the period covered by this report, CFIUS was required to complete a "review'' of a 

notified transaction within 30 days. CFIUS could initiate an "investigation" that could last up to 45 

additional days if CFIUS determined that it needed additional time to complete its assessment following the 

conclusion of the "review" period. · 

CFIUS will conclude all action with respect to a transaction (i.e., clear it to proceed) if it determines that the 

transaction does not pose any national security concerns, that any national security concerns are 

adequately addressed by other laws, or that mitigation measures agreed to or imposed by CFIUS resolve 

any national security concerns. If CFIUS determines that the transaction poses national security concerns 

that cannot be resolved, it will refer the transaction to the President, unless the parties choose to abandon 

the transaction. The President may suspend or prohibit the transaction, including by requiring divestment. 

By Jaw, the President has 15 days after completion of CFIUS's investigation to make a decision. The 

President must publicly announce his decision. 

CFIUS will seek mitigation measures or refer a transaction to the President only after such action is justified 

in a detailed written analysis of the national security risk posed by the transaction. CFIUS determinations 

are confirmed at senior levels by all CFIUS member agencies. 

With limited exceptions, any transaction submitted to CFIUS for review that CFIUS determines is a "covered 

transaction" under 31 C.F.R. 800.301 and for which it concludes all action receives "safe harbor." This 

means that CFIUS and the President will not subject the transaction to review again, absent certain unusual 

circumstances. 

By law, CFIUS does not publicly disclose information provided to CFIUS by parties to a transaction, nor 

does it reveal the fact that the parties have submitted the transaction for review. 

iii 
and National Security Act of 2007, or "FINSA" (Pub. L. No. 110-49). Section 721 (m)(2) requires 

that the annual report on covered transactions provide: 

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, 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, 1 investigations, withdrawals, and decisions or actions by the President 

under this section; 

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 a notice to the Committee in 

accordance with subsection (b)(1 )(C)(ii) later re-filed 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; and 

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. 

1 For purposes of this Annual Report, ''filings" means notices filed under Section 721 . 

1 
• CFIUS conducted a subsequent 

investigation

 with respect to 79 of those 172 

notices. 

• CFI US concluded action on 17 of the 172 notices after adopting mitigation measures 

pursuant to Section 721 to resolve national security concerns. 

• 27 of the 172 notices were withdrawn. In 11 of these instances, the parties filed a 

new notice in 2016. In four of these instances, the parties filed a new notice in 2017. 

In three instances, the parties withdrew the notice and abandoned the transaction 

after either CFIUS informed them that it was unable to identify mitigation measures 

· that would resolve its national security concerns or it proposed mitigation measures 

that the parties chose not to accept. In five instances, the parties withdrew the notice 

and abandoned the transaction because they failed to satisfy CFIUS process 

requirements. In four instances, the parties withdrew their notice and abandoned the 

transaction for commercial reasons unrelated to CFIUS review. 

• CFIUS referred one transaction to the President. The President issued an order 

prohibiting the acquisition of the U.S. businesses of Aixtron SE, a German company, 

by Grand Chip Investment Gmbh, a privately held German company whose ultimate 

parent is Fujian Grand Chip Investment Fund LP, a privately held Chinese company. 

For 2017: 

• CFIUS conducted a "review" with respect to the 237 notices of covered transactions 

filed with CFIUS. 

• CFIUS conducted a subsequent "investigation" with respect to 172 of those 237 

notices. 

• CFIUS concluded action on 29 of the 237 notices after adopting mitigation measures 

pursuant to Section 721 to resolve national security concerns. 

• 74 of the 237 notices were withdrawn. In 35 of these instances, the parties filed a 

new notice in 2017. In nine of these instances, the parties filed a new notice in 2018. 

In 24 instances, the parties withdrew the notice and abandoned the transaction after 

either CFIUS informed them that it was unable to identify mitigation measures that 

would resolve its national security concerns or it proposed mitigation measures that 

the parties chose not to accept. In two instances, the parties withdrew their notice 

and abandoned the transaction because they failed to satisfy CFIUS process 

2 
3 

various state-owned entities. 
the particular facts and circumstances of the transaction being reviewed by the committee and 

is not necessarily indicative of a trend. 

A sustained upward trend has continued from 2009 through 2017 in the number of notices filed. 

As shown in Table 1-3, the number of notices increased from 65 in 2009 to 237 in 2017. The 

upward trend was interrupted only twice, with a modest decline in 2013 and a minimal decline in 

2015. The proportions of notices proceeding to investigation in 2016 and 2017 were about 46 

percent and 72 percent respectively. • 

Apart from a general correlation between the number of notices and macroeconomic 

conditions-that is, when economies are strong, transaction quantity tends to increase-the 

information in the table below is not indicative of any discernible CFIUS trends. CFIUS 

considers each transaction on a case-by-case basis, and the disposition of any particular 

case-be it withdrawal, closing in review or investigation, or presidential decision-depends on 

the particular facts and circumstances of that case. 

Table 1-3. Covered Transactions, Withdrawals, and Presidential Decisions, 2009-2017 

Covered Transactions, Withdrawals, and Presidential Decisions* 

2009-2017 

Notices Number Notices Withdrawn Withdrawn Number of Presidential Year of During Investigation During Review Investigations Decisions Notices Phase Phase 

2009 65 5 25 2 0 

2010 93 6 35 6 0 

2011 111 1 40 5 0 

2012 114 2 45 20 1 

2013 97 3 48 5 0 

2014 147 3 51 9 0 

2015 143 3 66 10 0 

2016 172 6 79 21 1 

2017 237 7 172 67 1 

Total 1,179 36 561 145 3 

. *Please see Sectron 1-D on page 22 for a drscussron of reasons by whrch partres may seek to withdraw a 

notice. 

4 
40 percent) and the Finance, Information, and Services sectors (419, or 36 percent). The 

remainder of the notices were in the Mining, Utilities, and Construction sector (183, or 16 percent) and the Wholesale Trade, Retail Trade, and Transportation sector (103, or 9 percent).3 

These figures, and those in the tables below and in Section I.C.2 of this report, reflect the 

number of notices filed with CFIUS and are not adjusted to account for those transactions that 

were the subject of more than one notice-Le., where the original notice was withdrawn and 

then re-filed, as discussed in Section I.D of this report. 

The table and chart on the next page provide data by sector and by year of the 1, 179 covered 

transaction notices filed with CFIUS from 2009 through 2017. In 2016-2017, the relative 

proportions of notices in each sector did not change dramatically. Nonetheless, for the first time 

since 2009, the greatest number of filings in 2016 and 2017 occurred in the Finance, 

Information, and Services sector, accounting for 40 and 46 percent of transactions, respectively. 

The proportion of notices in the Manufacturing sector decreased slightly to 39 percent in 2016 

and 35 percent in 2017. The proportion of notices in the Mining, Utilities, and Construction 

sector also decreased modestly in 2016 and 2017 (to 10 percent in 2016 and 12 percent in 

2017). The proportion of notices in the Wholesale Trade, Retail Trade, and Transportation 

sector remained near its historical range at 11 percent in 2016 and 8 percent in 2017. 

2 In this report, industry sectors and subsectors are defined using 2012 and 2017 North American Industry Classification System 

(NAICS) codes of the target company. Whenever possible, the NAICS code assigned to each target company is based upon 

information provided in the notice. If no NAICS code was provided, CFIUS determined the most appropriate NAICS code using 

public Internet searches and the www.naics.com database. 

3 Figures add to more than 100 percent due to rounding. 

5 
2009 2010 

2011 2012 2013 

2014 2015 2016 2017 

Total 

120 

"' 15 100 

+I 

"" 

= ! 80 

'D 

! 60 I 

u 

o 40 

.. 

GI 

1 

::::i 20 

z 

21 (32%) 22 (34%) 19 (29%) 3 (5%) 65 

36 (39%) 35 (38%) 13 (14%) 9 (10%) . 93 

49 (44%) 38 (34%) 16 (14%) 8 (7%) 111 47 (39%) 36 (33%) 23 (20%} 8 (7%) 114 

35 (36%) 32 (33%) 20 (21%) 10 (10%} 97 

69 (47%} 38 (26%) 25 (17%) 15 (10%) 147 68 (48%) 42 (29%) 21 (15%) 12 (8%) 143 

67 (39%} 68 (40%) 18 (10%) 19 (11%) 172 

82 (35%) 108 (46%) 28 (12%) 19 (8%) 237 

474 (40%) 419 (36%) 183 (16%) 103 (9%) 1,179 

Graph 1-1. Covered Transactions by Sector and Year (2009-2017) 

Covered Transactions by Sector {2009-2017) 

-----------

~----------

_____ 

_____ __.,.---- .:::::::::::::=- _______________ ___.:::-

0 +---.-------.----.----.------,,---,------,----,-----, 

2009 2010 2011 2012 2013 2014 2015 2016 2017 

- Manufacturing - Finance, Information, and Services 

--Mining, Utilities, and Construction --Wholesale, Retail, and Transportation 

6 
In 2017, Manufacturing accounted for 35 percent (82) of all CFIUS notices filed. As in 2016, 

Computer and Electronic Product Manufacturing was the largest subsector with 27 (33 percent). 

Other significant subsectors included Chemical Manufacturing with 16 notices and 

Transportation Equipment Manufacturing with nine notices. 

Table 1-5. Covered Transactions from the Manufacturing Sector, 2013-2017 

NAICS 2017 2016 % of Total Manufacturing Manufacturing Code Notices Notices 2017 2016 2015 2013-17 

Food Manufacturing 311 0 0 0 0 0 0 

Textile Mills 313 0 0 0 0 1 1 

Textile Product Mills 314 0 0 0 0 1 0 

Apparel Manufacturing 315 0 0 0 0 1 0 

Leather and Allied Product ManufacturinQ 316 0 0 0 0 0 0 

Paper Manufacturing 322 0 1 0 1 0 0 

Printing and Related Support 323 0 0 0 0 0 0 Activities 

Petroleum and Coal Products 

ManufacturinQ 324 2 0 2 0 0 1 

Chemical Manufacturing 325 16 8 20 12 12 13 

Plastics and Rubber Products 

Manufacturing 326 2 2 2 3 4 4 Nonmetallic Mineral Product 

Manufacturing 327 1 0 1 0 0 1 

Primary Metal Manufacturing 331 4 2 5 3 0 2 

Fabricated Metal Product 

Manufacturing 332 6 6 7 9 1 6 

Machinery Manufacturing 333 8 11 10 16 12 13 

Computer and Electronic 334 27 25 33 37 49 39 Product Manufacturing 

Electrical Equipment, 

Appliance, and Component 335 6 5 7 7 3 6 

Manufacturing 

Transportation Equipment 

Manufacturing 336 9 5 11 7 12 11 Miscellaneous Manufacturing 339 1 2 1 3 3 2 

7 
In 2017, the Finance, Information, and Services sector accounted for 46 percent (108) of all 

CFIUS notices filed. As with 2016, Professional, Scientific, and Technical Services was the 

largest subsector with 40 notices (37 percent). Publishing Industries, Telecommunications, and 

Real Estate remained the next most significant subsectors, with nine, 11, and nine notices, 

respectively. 

Table 1-6. Covered Transactions from the Finance, Information, and 

Services Sector, 2013-2017 

Finance, Information, % of Total Finance, Information, and NAICS 2017 2016 Services and Code Notices Notices Services 2017 2016 2015 2013-17 

Publishing Industries (except 511 9 9 8 13 21 13 Internet) 

Motion Picture and Sound 512 2 0 2 0 0 1 Recordina Industries 

Telecommunications 517 11 9 10 13 17 12 

Data Processing, Hosting, 518 5 1 5 1 5 4 and Related Services 

Other Information Services 519 4 1 4 1 0 2 Credit Intermediation and 522 3 0 3 0 0 1 Related Activities 

Securities, Commodity 

Contracts, and Other 523 4 2 4 3 0 2 Financial Investments and 

Related Activities 

Insurance Carriers and 524 5 4 5 6 7 4 Related Activities 

Funds, Trusts, and Other 525 2 1 2 1 0 1 Financial Vehicles 

Real Estate 531 9 9 8 13 10 9 

Rental and Leasing Services 532 2 1 2 1 0 3 

Lessors of Nonfinancial 

Intangible Assets (except 533 2 1 2 1 0 1 

Coovriahted Works) 

Professional, Scientific, and 541 40 20 37 29 29 35 Technical Services 

Management of Companies 551 1 2 1 3 0 1 and Enterorises 

Administrative and Support 561 1 3 1 4 7 4 Services 

Waste Management and 562 1 1 1 1 2 1 Remediation Services 

Educational Services 611 0 1 0 1 0 0 

8 
Mining, Utilities, and Construction Sector 

In 2016, the Mining, Utilities, and Construction sector accounted for 10 percent (18) of all CFIUS 

notices filed. With 13 notices, the Utilities subsector accounted for nearly three fourths of the 

sector, a marked increase from its roughly 50 percent share in 2015. The Heavy and Civil 

Engineering Construction subsector was next largest, with two notices. 

In 2017, the Mining, Utilities, and Construction sector accounted for 12 percent (28) of CFIUS 

notices filed. While the proportion declined somewhat from 2016, Utilities remained the largest 

subsector with 64 percent (18 notices). The Oil and Gas Extraction subsector grew 

considerably from one notice in 2016 to five in 2017, tripling its portion of the Mining, Utilities, 

and Construction sector overall (to 18, from 6 percent). 

9 

Table 1-7. Covered Transactions from the Mining, Utilities, and 

Construction Sector, 2013-2017 

% of Total Mining, Utilities, and 

Mining, Utilities, and NAICS 2017 2016 Construction 

Construction Code Notices Notices 2017 2016 2015 2013-17 

Animal Production and 112 0 1 0 6 0 1 Aquaculture 

Forestry and Logging 113 0 0 0 0 0 2 

Oil and Gas Extraction 211 5 1 18 6 14 14 

Mining (except Oil and Gas) 212 0 0 0 0 14 8 

Support Activities for Mining 213 1 1 4 6 10 4 

Utilities 221 18 13 64 72 52 60 

Construction of Buildings 236 1 0 4 0 5 4 

Heavy and Civil Engineering 237 2 2 7 11 5 4 Construction 

Specialty Trade Contractors 238 1 0 4 0 0 3 
In 2017, the Wholesale Trade, Retail Trade, and Transportation sector accounted for 8 percent 

(19) of all CFIUS notices filed. As with 2016, the Merchant Wholesalers, Durable Goods and 

Support Activities for Transportation subsectors remained the largest. Both modestly increased 

their relative proportion within the sector, each accounting for 33 percent of notices. 

Table 1-8. Covered Transactions from the Wholesale, Retail, and 

Transportation Sector, 2013-2017 

Wholesale Trade, % of Total Wholesale Trade, Retail Trade, NAICS 2017 2016 and Transportation Retail Trade, and Code Notices Notices Transportation 2017 2016 2015 2013-17 

Merchant Wholesalers, 423 6 5 33 28 25 21 Durable Goods 

Merchant Wholesalers, 424 1 2 6 11 17 11 Nondurable Goods 

Motor Vehicle and Parts 441 0 0 0 0 8 1 Dealers 

Nonstore Retailers 454 0 1 0 5 0 1 

Air Transportation 481 1 0 6 0 0 1 

Rail Transportation 482 1 0 5 0 0 1 

Water Transportation 483 1 2 6 11 0 5 

Truck Transportation 484 0 1 0 6 17 4 Transit and Ground 485 0 0 0 0 0 0 Passenaer Transportation 

Pipeline Transportation 486 1 2 6 11 0 7 

Support Activities for 488 6 4 33 22 25 36 Transportation 

Couriers and Messengers 492 0 0 0 0 8 1 

Warehousing and Storage 493 0 0 0 0 0 3 

Accommodation 721 2 2 11 11 0 7 

10 
11 
Table 1-9. Covered Transactions by Business Sector of U.S. Companies, 2013-2017 

4-Digit 3-Digit 2017 2016 

% of 3-Digit Corresponding 

Business Sector 3-Digit NAICS Category NAICS Code4 

NAICS NAICS Notices Notices 2017 2016 2015 2013-17 

Hog and Pig Farming 1122 112 Animal Production and Aquaculture 0 1 N/A 100 N/A 100 

Oil and Gas Extraction 2111 211 Oil and Gas Extraction 5 1 100 100 0 38 

Support Activities for Mining 2131 213 Support Activities for Mining 1 1 100 100 0 40 

Electric Power Generation, 

Transmission and Distribution 2211 221 Utilities 15 11 83 85 100 55 

Natural Gas Distribution 2212 221 Utilities 1 2 6 15 0 12 

Water, Sewage and Other Systems 2213 221 Utilities 2 0 11 0 0 7 

Residential Building Construction 2361 236 Construction of Buildings 1 0 100 N/A 0 25 

Utility System Construction 2371 237 Heavy and Civil Engineering Construction 2 1 100 50 100 80 

Land Subdivision 2372 237 Heavy and Civil Engineering Construction 0 1 0 50 0 20 

Foundation, Structure, and Building 

Exterior Contractors 2381 238 Specially Trade Contractors 1 0 100 N/A N/A 33 

Converted Paper Product 

Manufacturing 3222 322 Paper Manufacturing 0 1 N/A 100 N/A 100 

Petroleum and Coal Products 

Manufacturing 3241 324 Petroleum and Coal Products Manufacturing 2 0 100 N/A NIA 67 

Basic Chemical Manufacturing 3251 325 Chemical Manufacturing 1 2 6 25 0 8 

Resin, Synthetic Rubber, and Artificial 

Synthetic Fibers and Filaments 3252 325 Chemical Manufacturing 4 1 25 13 13 15 Manufacturing 

Pesticide, Fertilizer, and Other 

Aaricultural Chemical Manufacturina 3253 325 Chemical Manufacturing 4 2 25 25 0 15 

Pharmaceutical and Medicine 

Manufacturing 3254 325 Chemical Manufacturing 5 3 31 38 38 28 

Other Chemical Product and 

Preparation Manufacturina 3259 325 Chemical Manufacturing 2 0 13 0 0 5 

Plastics Product Manufacturing 3261 326 Plastics and Rubber Products Manufacturing 2 2 100 100 0 50 

• For cells maiked "N/A," there were no transactions corresponding to the 3--digit NAICS code for the given time period. 

12 
% of 3-Digit Corresponding 4-Digit 3-Digit 3-Digit NAICS Category 2017 2016 NAICS Code4 Business Sector NAICS NAICS Notices Notices 2017 2016 2015 2013-17 

Cement and Concrete Product 

Manufacturing 3273 327 Nonmetallic Mineral Product Manufacturing 1 0 100 NIA NIA 33 

Iron and Steel Mills and Ferroalloy 

Manufacturina 3311 331 Primary Metal Manufacturing 1 0 25 0 N/A 17 

Alumina and Aluminum Production 3313 and Processina 331 Primary Metal Manufacturing 1 2 25 100 NIA 50 

Nonferrous Metal (except Aluminum) 

Production and Processina 3314 331 Primary Metal Manufacturing 1 0 25 0 NIA 17 

Foundries 3315 331 Primary Metal Manufacturing 1 0 25 0 NIA 17 

Architectural and Structural Metals 

Manufacturing 3323 332 Fabricated Metal Product Manufacturing 0 2 0 33 0 11 

Machine Shops; Turned Product; and 

Screw, Nut, 3327 332 Fabricated Metal Product Manufacturing 2 and Bolt Manufacturing 1 33 17 0 26 

Other Fabricated Metal Product 

Manufacturing 3329 332 Fabricated Metal Product Manufacturing 4 3 67 50 0 42 

Agriculture, Construction, and Mining 

Machinery Manufacturino 3331 333 Machinery Manufacturing 1 3 13 27 0 10 

Industrial Machinery Manufacturing 3332 333 Machinery Manufacturing 3 6 38 55 0 26 

Commercial and Service Industry 

Machinery Manufacturino 3333 333 Machinery Manufacturing 4 0 50 0 25 14 

Metalworking Machinery 

Manufacturina 3335 333 Machinery Manufacturing 0 1 0 9 0 2 

Other General Purpose Machinery 

Manufacturina 3339 333 Machinery Manufacturing 0 1 0 9 0 7 

Computer and Peripheral Equipment 3341 334 Computer and Electronic Product 

Manufacturing Manufacturing 4 4 15 17 12 10 

Communications Equipment 3342 334 Computer and Electronic Product 

Manufacturing Manufacturing 5 6 19 25 15 17 

Audio and Video Equipment 3343 334 Computer and Electronic Product 

Manufacturing Manufacturing 2 0 7 0 3 2 

Semiconductor and Other Electronic 3344 334 Computer and Electronic Product 

Component Manufacturing Manufacturing 12 12 44 48 55 43 

13 
% of 3-Digit Corresponding 

Business Sector 4-Digit 3-Digit 3-Digit NAICS Category 2017 2016 NAICS Code4 

NAICS NAICS Notices Notices 2017 2016 2015 2013-17 

Navigational, Measuring, Computer and Electronic Product Electromedical, and Control 3345 334 Manufacturing 4 3 15 13 15 21 Instruments Manufacturing 

Electric Lighting Equipment 3351 335 Electrical Equipment, Appliance, and 

Manufacturing Component Manufacturing 0 1 0 17 0 10 

Electrical Equipment Manufacturing 3353 335 Electrical Equipment, Appliance, and 

Component Manufacturing 1 3 17 50 0 24 

Other Electrical Equipment and 3359 335 Electrical Equipment, Appliance, and 

Component Manufacturing Component Manufacturing 5 1 83 17 50 43 

Motor Vehicle Manufacturing 3361 336 Transportation Equipment Manufacturing 2 1 22 20 0 12 

Motor Vehicle Parts Manufacturing 3363 336 Transportation Equipment Manufacturing 4 1 44 20 13 18 

Aerospace Product and Parts 

Manufacturing 3364 336 Transportation Equipment Manufacturing 3 2 33 40 50 44 

Railroad Rolling Stock Manufacturing 3365 336 Transportation Equipment Manufacturing 0 1 0 20 0 3 

Medical Equipment and Supplies 

Manufacturing 3391 339 Miscellaneous Manufacturing 1 0 100 0 0 17 

Other Miscellaneous Manufacturing 3399 339 Miscellaneous Manufacturing 0 2 0 100 100 83 

Motor Vehicle and Motor Vehicle 

Parts and Supplies Merchant 4231 423 Merchant Wholesalers, Durable Goods 1 0 17 0 0 6 Wholesalers 

Professional and Commercial 

Equipment and Supplies Merchant 4234 423 Merchant Wholesalers, Durable Goods 1 2 17 40 33 25 Wholesalers 

Household Appliances and Electrical 

and Electronic Goods Merchant 4236 423 Merchant Wholesalers, Durable Goods 4 1 67 20 33 50 Wholesalers 

Machinery, Equipment, and Supplies 

Merchant Wholesalers 4238 423 Merchant Wholesalers, Durable Goods 0 2 0 40 33 19 

Chemical and Allied Products 

Merchant Wholesalers 4246 424 Merchant Wholesalers, Nondurable Goods 1 2 100 100 50 50 

Electronic Shopping and Mail-Order 

Houses 4541 454 Nonstore Retailers 0 1 NIA 100 N/A 100 

14 
2017 

% of 3-Digit Corresponding 

Business Sector 4-Digit 3-Digit 3-Digit NAICS Category 2016 NAICS Code4 

NAICS NAICS Notices Notices 2017 2016 2015 2013-17 

Nonscheduled Air Transportation 4812 481 Air Transportation 1 0 100 N/A N/A 100 

Rail Transportation 4821 482 Rail Transportation 1 0 100 N/A N/A 100 

Deep Sea, Coastal, and Great Lakes 

Water Transportation 4831 483 Water Transportation 1 2 100 100 N/A 100 

Specialized Freight Trucking 4842 484 Truck Transportation 0 1 NIA 100 50 67 

Pipeline Transportation of Crude Oil 4861 486 Pipeline Transportation 1 0 100 0 N/A 40 

Pipeline Transportation of Natural 4862 Gas 486 Pipeline Transportation 0 2 0 100 N/A 60 

Support Activities for Air 

Transportation 4881 488 Support Activities for Transportation 2 2 33 50 0 26 

Support Activities for Rail 

Transportation 4882 488 Support Activities for Transportation 1 0 17 0 0 4 

Support Activities for Water 4883 Transportation 488 Support Activities for Transportation 2 0 33 0 0 19 

Support Activities for Road 

Transportation 4884 488 Support Activities for Transportation 1 0 17 0 0 4 

Freight Transportation Arrangement 4885 488 Support Activities for Transportation 0 2 0 50 0 7 

Software Publishers 5112 511 Publishing Industries (except Internet) 9 9 100 100 100 95 

Motion Picture and Video Industries 5121 512 Motion Picture and Sound Recording 2 0 100 N/A N/A 100 Industries 

Wired Telecommunications Carriers 5171 517 Telecommunications 2 3 18 33 0 26 

Wireless Telecommunications 

Carriers (exceot Satellite) 5172 517 Telecommunications 1 0 9 0 14 9 

Wired and Wireless 

Telecommunications Carriers 5173 517 Telecommunications 1 0 9 0 0 3 

Satellite Telecommunications 5174 517 Telecommunications 6 3 55 33 0 29 

Other Telecommunications 5179 517 Telecommunications 1 3 9 33 0 15 

Data Processing, Hosting, and 5182 518 Data Processing, Hosting, and Related 

Related Services Services 5 1 100 100 100 91 

Other Information Services 5191 519 Other Information Services 4 1 100 100 N/A 83 

Activities Related to Credit 

Intermediation 5223 522 Credit Intermediation and Related Activities 3 0 100 N/A N/A 75 

15 
-

% of 3-Digit Corresponding 

Business Sector 4-Digit 3-Digit 3-Digit NAICS Category 2017 2016 NAICS Code4 

NAICS NAICS Notices Notices 2017 2016 2015 2013-17 

Securities and Commodity Contracts 5231 523 Securities, Commodity Contracts, and Other 

Intermediation and Brokerage Financial 3 1 60 50 NIA 63 Investments and Related Activities 

Securities and Commodity . 5232 523 Securities, Commodity Contracts, and Other 

Exchanges Financial 0 1 0 50 NIA 13 Investments and Related Activities 

Other Financial Investment Activities 5239 523 Securities, Commodity Contracts, and Other 1 0 20 0 NIA 13 Financial Investments and Related Activities 

Insurance Carriers 5241 524 Insurance Carriers and Related Activities 5 4 100 100 0 75 . 

Insurance and Employee Benefit 

Funds 5251 525 Funds, Trusts, and Other Financial Vehicles 0 1 0 100 NIA 33 

Other Investment Pools and Funds 5259 525 Funds, Trusts, and Other Financial Vehicles 2 0 100 0 NIA 67 

Lessors of Real Estate 5311 531 Real Estate 8 5 89 56 100 77 

Activities Related to Real Estate 5313 531 Real Estate 1 4 11 44 0 19 

Automotive Equipment Rental and 

Leasing 5321 532 Rental and Leasing Services 1 0 50 0 NIA 10 

Commercial and Industrial Machinery 

and Eciuipment Rental and Leasing 5324 532 Rental and Leasing Services 1 1 50 100 NIA 80 

Lessors of Nonfinancial Intangible 5331 533 Lessors of Nonfinancial Intangible Assets 

Assets (except Copyrighted Works} 2 1 100 100 NIA 100 (except Copyrighted Works} 

Accounting, Tax Preparation, 5412 541 Professional, Scientific, and Technical 

Bookkeeping, and Payroll Services Services 0 1 0 5 0 1 

Architectural, Engineering, and 5413 541 Professional, Scientific, and Technical 

Related Services Services 17 4 43 20 25 24 

Specialized Design Services 5414 541 Professional, Scientific, and Technical 0 Services 0 0 0 0 0 

16 
3-Digit 2016 

% of 3-Digit Corresponding 

Business Sector 4-Digit 3-Digit NAICS Category 2017 NAICS Code4 

NAICS NAICS Notices Notices 2017 2016 2015 2013-17 

Computer Systems Design and 5415 541 Professional, Scientific, and Technical 

Related Services Services 10 7 25 35 42 . 34 

Management, Scientific, and 5416 541 Professional, Scientific, and Technical 

Technical Consulting Services Services 0 1 0 5 8 3 

Scientific Research and Development 5417 541 Professional, Scientific, and Technical 

Services Services 9 4 23 20 25 20 

Advertising, Public Relations, and 5418 541 Professional, Scientific, and Technical 

Related Services Services 1 0 3 0 0 1 

Other Professional, Scientific, and 5419 541 Professional, Scientific, and Technical 

Technical Services Services 3 3 8 15 0 7 

Management of Companies and 

Enterprises 5511 551 Management of Companies and Enterprises 1 2 100 100 N/A 100 

Investigation and Security Services 5616 561 Administrative and Support Services 0 3 0 100 67 67 

Other Support Services 5619 561 Administrative and Support Services 1 0 100 0 0 8 

Remediation and Other Waste 5629 562 Waste Management and Remediation 

Management Services Services 1 1 100 100 0 50 

Technical and Trade Schools 6115 611 Educational Services 0 1 N/A 100 N/A 100 

Offices of Physicians 6211 621 Ambulatory Health Care Services 2 0 67 N/A 0 50 

Outpatient Care Centers 6214 621 Ambulatory Health Care Services 1 0 33 N/A 0 25 

Traveler Accommodation 7211 721 Accommodation 2 2 100 100 N/A 100 

Electronic and Precision Equipment 

Recair and Maintenance 8112 811 Repair and Maintenance 1 1 33 33 N/A 33 

Commercial and Industrial Machinery 

and Equipment (except Automotive 

and Electronic) Repair and 8113 811 Repair and Maintenance 2 2 67 67 N/A 67 

Maintenance 

Other Personal Services 8129 812 Personal and Laundry Services 1 0 100 N/A NIA 100 

17 
Table 1-10. Covered Transactions by Acquirer Home Country or Geographic Economy, 2015-

2017 

Covered Transactions by Acquirer Home Country or Geographic Economy, 2015-2017 

Country/Economy 2015 

-

2016 2017 Total 

Australia 4 4 5 13 Austria 0 1 2 3 

BelQium 1 0 3 4 Bermuda 0 1 0 1 Brazil 0 1 1 2 British Virgin 

Islands 0 6 4 10 

Canada 22 22 22 66 Cavman Islands 7 5 8 20 China 29 54 60 143 

Denmark 1 0 0 1 

Finland 1 3 0 4 Finland 1 0 0 1 France 8 8 14 30 

Germanv 1 6 7 14 Guernsev 0 0 1 1 

HonQ KonQ 2 3 0 5 Hunaary 0 0 1 1 

India 0 1 3 4 

Indonesia 2 0 0 2 Ireland 2 3 3 8 

Israel 3 3 4 10 

Italy 2 0 2 4 

Japan 13 13 20 46 

Jersev 0 1 3 4 

Korea 0 1 0 1 Kuwait 0 1 2 3 Lebanon 0 1 0 1 

18 
Russia 0 0 3 3 

Saudi Arabia 1 0 1 2 Seychelles 0 1 0 1 Singapore 3 2 6 11 South Africa 2 0 2 4 

South Korea 1 6 6 13 

Soain 2 1 1 4 

Sweden 3 1 6 10 Switzerland 2 0 7 9 

Taiwan 0 1 0 1 

Turkev 2 2 0 4 

United Arab Emirates 1 1 2 4 

United Kingdom 19 7 18 44 

Total 143 172 237 552 

Table 1-11 on the next two pages shows the geographic concentration of notices in each of four 

industry sectors for the period 2015 to 2017. Overall, the Manufacturing and Finance, 

Information, and Services sectors each accounted for 39 percent of all notices. The Mining, 

Utilities, and Construction sector accounted for about 12 percent, and the Wholesale Trade, 

Retail Trade, and Transportation sector accounted for 9 percent. Notices from Canada, China, 

and Japan, which accounted for 46 percent of the notices from 2015 to 2017, were generally 

consistent with this general distribution across sectors. However, China accounted for a higher 

proportion of Finance, Information, and Services transactions, while Canada accounted for a 

large proportion of Mining, Utilities, and Construction sector transactions. 

19 
Belciium 2 2 0 0 4 Bermuda 0 1 0 0 1 Brazil 0 2 0 0 2 British Virnin Islands 5 2 3 0 10 

Canada 22 17 22 5 66 Cavman Islands 9 8 1 2 20 China 50 71 9 13 143 

Denmark 0 0 0 1 1 

Finland 1 4 0 0 5 France 13 11 3 3 30 

Germanv 3 10 0 1 14 Guernsey 0 1 0 0 1 

Hong Kong 1 3 1 0 5 Hunaarv 0 1 0 0 1 

India 2 2 0 0 4 

Indonesia 2 0 0 0 2 Ireland 8 0 0 0 8 Israel 4 6 0 0 10 Italy 0 4 0 0 4 

Japan 20 20 4 2 46 

Jersey 1 3 0 0 4 

Korea 1 0 0 0 1 Kuwait 2 0 0 1 3 Lebanon 0 0 0 1 1 

Liechtenstein 1 0 0 0 1 Luxembourci 5 3 1 0 9 

Malta 0 1 0 0 1 Mexico 1 0 0 2 3 Netherlands 8 4 3 0 15 Norwav 1 2 0 1 4 Paoua New Guinea 0 0 1 0 1 Portuaal 0 0 6 0 6 

Russia 2 0 0 1 3 

Saudi Arabia 0 2 0 0 2 

Sevchelles 1 0 0 0 1 Sinciaoore 5 4 0 2 11 

20 
Switzerland 2 4 3 0 9 

Taiwan 0 1 0 0 1 

Turkey 2 1 1 0 4 

United Arab Emirates 1 2 0 1 4 

United Kingdom 21 15 0 8 44 

Total 218 217 67 50 552 

21 
withdraw and re-file their notice because a material change in the terms of the transaction 

warrants the filing of a new notice. In still other cases, the parties might request to withdraw 

their notice because they are abandoning the transaction for commercial reasons, or because 

the parties do not want to abide by CFIUS's proposed mitigation, or in light of a CFIUS 

determination to recommend that the President suspend or prohibit the transaction. When 

appropriate, the Committee has established processes to track the status of a withdrawn 

transaction or interim protections to address specific national security concerns identified during 

the review or investigation of the withdrawn transaction. 

In 2016, CFIUS approved the withdrawal of 27 notices. The parties withdrew six notices during 

the 30-day review period and 21 notices after the commencement of the 45-day investigation 

period. 

Of the 27 notices, in 11 instances the parties filed a new notice in 2016. CFIUS concluded 

action in 1 O of those cases and referred one case to the President, who blocked the transaction, 

as detailed on page 2 above. In three instances, the parties withdrew their notice and 

abandoned their transaction after CFIUS informed them that it was unable to identify mitigation 

measures that would resolve its national security concerns or CFIUS proposed mitigation terms 

that the parties chose not to accept. In five instances, the parties withdrew their notice and 

abandoned the transaction because they failed to satisfy CFIUS process requirements. In four 

instances, the parties withdrew their notice and abandoned the transaction for commercial 

reasons unrelated to CFIUS review. In four instances, the parties filed a new notice in 2017; 

these cases are included in the 2017 data below. 

In 2017, CFIUS approved the withdrawal of 74 notices. The parties withdrew four notices during 

the 30-day review period and 70 notices after the commencement of the 45-day investigation 

period. 

.. 

Of the 74 notices, in 35 instances the parties filed a new notice in 2017. CFIUS concluded 

action in 34 of those cases and referred one case to the President, who blocked the transaction, 

as detailed on page 3 above. In 24 instances, the parties withdrew their notice and abandoned 

their transaction after CFIUS informed them that it was unable to identify mitigation measures 

that would resolve its national security concerns or CFIUS proposed mitigation terms that the 

parties chose not to accept. In two instances, the parties withdrew their notice and abandoned 

the transaction because they failed to satisfy CFIUS process requirements. ln four instances, 

5 As noted previously, for the years covered in this Annual Report, the review period was 30 days. The passage of FIRRMA in 2018 

subsequently extended the review period to 45 days. 

22 
23 
The Committee has adopted procedures to evaluate and ensure that parties to a covered 

transaction remain in compliance with any risk mitigation measure under Section 721 that 

CFIUS negotiates with or imposes on the parties. For all mitigation measures executed since 

FINSA became effective, Treasury, as Chair of CFIUS, has designated at least one USG 

signatory to a mitigation measure as a lead agency for monitoring compliance with that 

measure. Lead agencies carry out their monitoring responsibilities on behalf of the Committee 

and report back to the Committee on at least a quarterly basis. ln addition, signatories to 

mitigation measures that were entered into before FINSA's effective date also report to CFIUS 

quarterly on compliance with those measures. As described below, all lead agencies for 

monitoring mitigation compliance have implemented processes to carry out their responsibilities. 

Mitigation measures negotiated and adopted in 2016 and 2017 required the businesses 

involved to take specific and verifiable actions, including, for example: 

• Prohibiting or limiting the transfer or sharing of certain intellectual property, trade secrets, or 

know-how. 

• Establishing guidelines and terms for handling existing or future USG contracts, USG 

customer information, and other sensitive information. 

• Ensuring that only authorized persons have access to certain technology; that only 

authorized persons have access to USG, company, or customer information; and that the 

foreign acquirer not have direct or remote access to systems that hold such information. 

• Ensuring that only U.S. citizens handle certain products and services, and ensuring that 

certain activities and products are located only in the United States. 

• Establishing a Corporate Security Committee and other mechanisms to ensure compliance 

with all required actions, including the appointment of a USG-approved security officer or 

member of the board of directors and requirements for security policies, annual reports, and 

independent audits. 

• Notifying, for approval, security officers or relevant USG parties in advance of foreign 

national visits to the U.S. business. 

• Security protocols to ensure the integrity of goods or software sold to the USG. 

• Notifying customers regarding the change of ownership. 

24 
CFIUS agencies use a variety of means to monitor and enforce compliance by the 

companies that are subject to the measures, including: 

• Periodic reporting to USG agencies by the companies; 

• On-site compliance reviews by USG agencies; 

• Third-party audits when provided for by the terms of the mitigation measures; and 

• Investigations and remedial actions if anomalies or breaches are discovered or suspected. 

Due to the number and complexity of mitigation measures implemented to date, 

individual CFIUS agencies monitor compliance through a number of internal 

procedures, including: 

• Assigning staff responsibilities for the monitoring of compliance; 

• Designing tracking systems to m_onitor required reports; and 

• Instituting internal instructions and procedures to ensure that in-house expertise is drawn 

upon to analyze compliance with measures. 

a Divestiture of all of a U.S. business is typically effectuated through a withdrawal of the notice and abandonment of the transaction. 

For this reason, such divestitures are not included in data on cases cleared with mitigation. 

25 
As discussed in the Guidance Concerning the National Security Review Conducted by CFIUS, 

which CFIUS published in the Federal Register on December 8, 2008, the transactions that 

CFIUS had thus far reviewed presented a broad range of national security considerations. 

CFIUS examines the national security considerations to determine whether, in light of the 

specific facts and circumstances related to the transaction, the transaction would adversely 

affect national security and pose a national security risk. Among the considerations presented 

by transactions reviewed by CFIUS are the following: 

Foreign control of U.S. businesses that: 

• Provide products and services to an agency or agencies of the U.S. Government, or 

state and local authorities that have functions that are relevant to national security. 

• Provide products or services that could expose national security vulnerabilities, including 

potential cyber security concerns, or create vulnerability to sabotage or espionage. This 

includes consideration of whether the covered transaction will increase the risk of 

exploitation of the particular U.S. business's position in the supply chain. 

• Have operations, or produce or supply products or services, the security of which may 

have implications for U.S. national security, such as businesses that involve 

infrastructure that may constitute critical infrastructure; businesses that involve various 

aspects of energy production, including extraction, generation, transmission, and 

distribution; businesses that affect the national transportation system; and businesses 

that could significantly and directly affect the U.S. financial system. 

• Have access to classified information or sensitive government or government contract 

information, including information about employees. 

• Are in the defense, security, and national security-related law enforcement sectors. 

• Are involved in activities related to weapons and munitions manufacturing, aerospace, 

satellite, and radar systems. 

• Produce certain types of advanced technologies that may be useful in defending, or in 

seeking to impair, U.S. national security, which may include businesses engaged in the 

design and production of equipment or components that have both commercial and 

military applications. Such transactions have included, for example, businesses 

engaged in the design, production, or provision of goods and services involving network 

26 
• Are in a field with significant national security implications where there are few 

alternative suppliers or where a loss in U.S. technological competitiveness would be 

detrimental to national security. 

• With respect to the various technologies described above, could facilitate their transfer to 

third parties not directly related to the buyer, to the detriment of national security. 

• Have operations or facilities that are in proximity to military or other sensitive USG 

facilities. 

• Hold substantial pools of potentially sensitive data about U.S. persons and businesses 

that have national security importance. Such businesses could be in any number of 

sectors, including, for example, the insurance sectors, health services, and technology services. 

• Otherwise facilitate foreign intelligence collection against U.S. targets. 

Acquisition of control by foreign persons that 

• Are controlled by a foreign government. 

• Are from a country with a record on nonproliferation and other national security-related 

matters that raises concerns. 

• Have historical records of taking or intentions to take actions that could impair U.S. 

national security. 

• Have a history of doing business in sanctioned countries. 

CFIUS reviews all relevant national security considerations and the particular facts and 

circumstances of a transaction to determine whether the transaction will pose a national security 

risk. Among the factors that CFIUS takes into account are the following, listed in 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; · 

27 
ii. under section 6(1) of the Export Administration Act of 1979, as a country of 

concern regarding missile proliferation; or 

iii. under section 6(m) of the Export Administration Act of 1979, as a country of 

concern regarding the proliferation of chemical and biological weapons; 

b. identified by the Secretary of Defense as posing a potential regional military threat to 

the interests of the United States; or 

c. listed under section 309( c) of the Nuclear Non-Proliferation Act of 1978 on the 

"Nuclear Non-Proliferation-Special Country List" (15 C.F.R. Part 778, Supplement 

No. 4) or any successor list; 

5) the potential effects of the proposed or pending transaction on United States international 

technological leadership in areas affecting United States national security; 

6) the potential national security-related effects on United States critical infrastructure, 

including major energy assets; 

7) the potential national security-related effects on United States critical technologies: 

8) whether the covered transaction is a foreign government-controlled transaction, as 

determined under subsection (b)(1 )(B) of Section 721; 

9) as appropriate, and particularly with respect to transactions requiring an investigation under 

subsection (b)(1)(8) of Section 721, a review of the current assessment ofa. the adherence of the subject country to nonproliferation control regimes, including 

treaties and multilateral supply guidelines, which shall draw on, but not be limited to, 

the annual report on "Adherence to and Compliance with Arms Control, 

Nonproliferation and Disarmament Agreements and Commitments," required by 

section 403 of the Arms Control and Disarmament Act 

b. the relationship of such country with the United States, specifically on its record on 

cooperating in counter-terrorism efforts, which shall draw on, but not be limited to, 

the report of the President to Congress under section 7120 of the Intelligence 

Reform and Terrorism Prevention Act of 2004; and 

c. the potential for transshipment or diversion of technologies with military applications, 

including an analysis of national export control laws and regulations; 

10) the long-term projection of United States requirements for sources of energy and other 

critical resources and materials; and 

11) such other factors as the President or the Committee may determine to be appropriate 

generally or in connection with a specific review or investigation. 

28 
29 
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." 

Subsection A addresses the requirement laid out in (i), and subsection B addresses the 

requirement laid out in (ii). 

Definitions & Methodologies 

The definition of "critical technologies," which includes technologies subject to certain U.S. 

export controls, is set forth in 31 C.F.R. § 800.209, Regulations Pertaining to Mergers, 

Acquisitions, and Takeovers by Foreign Persons (the "CFIUS regulations"), published in the 

Federal Register on November 21, 2008.7 See the Appendix for this definition. "Critical 

technology companies" are U.S. companies that CFIUS identified for this section of the report 

involved in research, development, or production of critical technologies. The Appendix also 

provides the definition of "coordinated strategy" for purposes of this section of the report, 

describes the methodology and data sources used to identify transactions involving critical 

technology companies ("critical technology transactions"), and the approach used to conduct the 

analyses required by Section 721 related to critical technologies. Finally, it lists the agencies 

and other entities that participated in preparing this section of the report. 

7 This report reflects the CFIUS process in effect during 2016 and 2017, the period covered by this report. 

30 
2. Summary of Foreign Merger and Acquisition (M&A) Activity in the 

United States 

Using the methodology described in the Appendix, in 2016 and 2017 CFIUS identified 178 

CFIUS cases involving acquisitions of U.S. critical technology companies, involving acquirers 

from 36 countries and territories. CFIUS agencies and the USIC evaluated all 178 transactions for indications of a coordinated strategy, as defined for this report, to acquire U.S. critical 

technologies. 

3. Frequency of Activity by Countries and Companies 

Table 11-1 lists the originating countries for covered transactions involving acquisitions of U.S. 

critical technology companies in 2016 and 2017: 

Table 11-1: Foreign Acquirers of U.S. Critical Technology in 2016-2017 CFIUS cases 

Country 2016 2017 Total 

Australia 0 1 1 

Austria 1 1 2 

Belgium 0 1 1 Bermuda 1 0 1 Brazil 1 1 2 

British Virgin Islands 1 1 2 

Canada 8 7 15 Cayman Islands 2 3 5 China 17 21 38 

Finland 1 0 1 France 5 9 14 

Germany 3 4 7 Guernsey 0 1 1 

Hong Kong 2 0 2 

India 1 3 4 Ireland 3 0 3 Israel 3 3 6 Italy 0 2 2 

Japan 8 10 18 

31 
Russia 0 2 2 

Singapore 0 4 4 

South Africa 0 1 1 

South Korea 0 2 2 Spain 1 1 2 Sweden 1 3 4 

Switzerland 0 2 2 

Taiwan 1 0 1 Turkey 2 0 2 

United Kingdom 3 12 15 

Total 73 105 178 

As shown in Figure 11-1, the largest amount of M&A activity involving foreign acquisitions of U.S. 

critical technology companies involved targets whose primary activities are in the Professional 

Services and Computers and Electronics sectors. 

Figure 11-1: Completed Covered Transactions by Sector of U.S. Target Company, 2016-2017 

35 

30 

25 20 

15 

10 

5 

0 

31 

29 

12 

I 

'tt" • <J 

~e 0 

12 11 10 10 I I I I 8 7 6 I I I 

,t4. 1⁄2 ,i>, ;:,.'> ... ~e ~o f$-e ~e ,z, ·S' ~<:' -::-,e'> rS' 0,$' ~e .r._,'?i ,'$-'~ ,$-~ ~'?i ~'l, ,<:' ~o 

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32 
A 2011 Office of the National Counterintelligence Executive report to Congress stated that the 

pace of foreign economic collection and industrial espionage activities against major U.S. 

corporations and USG agencies is accelerating. Furthermore, as the United States is a leader 

in the development of new technologies and a central player in global financial and trade 

networks, foreign attempts to collect U.S. technological and economic information will continue 

at a high level and will represent a growing and persistent threat to U.S. economic security. 

Sensitive U.S. economic information and technology are targeted by the intelligence services, 

private sector companies, academic and research institutions, and citizens of dozens of 

countries. 

33 
This section of the CFIUS Annual Report to Congress has been prepared in accordance with 

section ?(c) of FINSA, which provides: 

(1) STUDY REQUIRED.-Before the end of the 120-day period beginning on the date of 

enactment of this Act and annually thereafter, the Secretary of the Treasury, in consultation 

with the Secretary of State and the Secretary of Commerce, shall conduct a study on foreign 

direct investments in the United States, especially investments in critical infrastructure and 

industries affecting national security, by-

(A) foreign governments, entities controlled by or acting on behalf of a foreign 

government, or persons of foreign countries which comply with any boycott of Israel; 

or 

(B) foreign governments, entities controlled by or acting on behalf of a foreign 

government, or persons of foreign countries which do not ban organizations 

designated by the Secretary of State as foreign terrorist organizations. 

(2) REPORT.-Before the end of the 30-day period beginning upon the date of completion 

of each study under paragraph (1) and thereafter in each annual report under section 

721 (m) of the Defense Production Act of 1950 (as added by this section), the Secretary of 

the Treasury shall submit a report to Congress, for transmittal to all appropriate committees 

of the Senate and the House of Representatives, containing the findings and conclusions of 

the Secretary with respect to the study described in paragraph (1), together with an analysis 

of the effects of such investment on the national security of the United States and on any 

efforts to address those effects. 

A. Summary of Findings and Conclusions of Study 

• Mergers with, and acquisitions of, U.S. companies (M&A), the main form of foreign direct 

investment (FOi) into the United States, by investors from the countries described in section 

7(c)(1) of FINSA that were completed between January 1, 2016, and December 31, 2017 

("subject M&A transactions"), represent a small percentage of the total number of such FOi 

flows into the United States. 

• The value of subject M&A transactions with publicly reported values was $13.3 billion. As 

described in subsection 111.C below, not all publicly announced transactions are reported 

with dollar values, so the actual value of subject M&A transactions is greater than $13.3 

billion. 

• The subject M&A transactions cover several economic sectors. 

34 
B. Study Methodology 

1. Identification of Relevant Countries 

To identify those countries that complied with any boycott of Israel in 2016 and 2017, as 

required by the statute, CFIUS examined the "List of Countries Requiring Cooperation with an 

International Boycott," published by the Department of the Treasury (pursuant to section 999 of 

the Internal Revenue Code)8 and reports sent to Congress by the Department of State (pursuant 

to section 564 of the Foreign Relations Authorization Act, FY 1994-95), as well as public 

sources of information describing the countries' observance of a primary boycott of Israel. 

Based on these sources of information, CFIUS interpreted the reporting requirement under 

section 7(c)(1)(A) of FINSA to apply to the following countries: Algeria, Iran, Kuwait, Lebanon, 

Libya, Qatar, Saudi Arabia, Sudan, Syria, the United Arab Emirates, and Yemen. 

To identify those countries that did not ban foreign terrorist organizations in 2016 and 2017, 

CFIUS interpreted section 7(c)(1)(B) of FINSA to apply to countries certified by the Department 

of State as "not cooperating fully with United States antiterrorism efforts" (pursuant to section 

40A of the Arms Export Control Act, as amended.) Those countries were Eritrea, Iran, North 

Korea, Syria, and Venezuela.9 

2. Scope of FDI 

Mergers with, and acquisitions of, U.S. companies are the primary form of FOi into the United 

States and the form of FOi that CFIUS is authorized under Section 721 to review. Accordingly, 

the following types of transactions are included in the study: (i) transactions notified to CFIUS 

under Section 721; (ii) M&A transactions that were not notified to CFIUS but that its member 

agencies reviewed through procedures that each agency has adopted for this purpose; and (iii) 

M&A transactions that resulted in an ownership stake in a U.S. company of at least 10 

percent, 10 as contained in the Thomson ONE database, which is a recognized financial 

database. 

8 81 Fed. Reg. 4739 (Jan. 27, 2016), 81 Fed. Reg. 20,720 (Apr. 8, 2016), 81 Fed. Reg. 51,967 (Aug. 5, 2016), 81 Fed. Reg. 87128 

(Dec. 2, 2016), 82 Fed. Reg. 15793 (Mar. 30, 2017), 82 Fed. Reg. 36076 (Aug. 2, 2017), and 83 Fed. Reg. 966 (Jan. 8, 2018). 9 81 Fed. Reg. 35436 (Jun. 2, 2016), 82 Fed. Reg. 24424 (May 26, 2017), 83 Fed. Reg. 23988 (May 23, 2018). 1° FDI is generally understood to imply ownership of at least 10 percent, a benchmark used by many statistical agencies around the 

world, including the Department of Commerce's Bureau of Economic Analysis, the Council of Economic Advisors (Economic Report 

of the President), the International Monetary Fund, and the Organization for Economic Cooperation and Development. As noted in 

the description of the Thomson ONE database, these sources did not always provide information regarding the acquirer's total 

ownership stake that it acquired in the U.S. company. Therefore, some of the transactions analyzed in this study may be portfolio 

investments rather than FDI. 

35 
resulted in an ownership stake in a U.S. company of less than 1 O percent, where data 

concerning the interest acquired was available. 

C. Detailed Findings of Study 

1. Identification of the Subject M&A Transactions 

The study identified 118 M&A transactions in 2016 and 2017 involving investors from Lebanon, 

the United Arab Emirates, Saudi Arabia, Qatar, and Kuwait, which are countries that comply 

with any boycott of Israel. 

The study did not identify any M&A transactions in 2016 or 2017 involving investors from 

Eritrea, Iran, North Korea, or Syria, which are countries identified as not cooperating fully with 

U.S. antiterrorism efforts and which were subject to stringent economic sanctions. However, the 

study identified three M&A transactions involving investors from Venezuela, a country that was 

designated as not cooperating fully with U.S. antiterrorism efforts. 

86 of the 121 identified transactions had reported values. The combined value of the reported 

values is approximately $13.3 billion. Data sources consulted for this study did not report, and 

Treasury staff was unable to determine independently, values for 35 of the 121 transactions 

analyzed. As a result, the value of the 121 total transactions is necessarily greater than $13.3 

billion. Table 111-1 on the next page shows the number and aggregate value of the transactions 

for each of the relevant countries. 

Table 111-1. Aggregate Value of Transactions 

Country 2016-2017 Transactions" Known Transaction Value ($ million) 

United Arab Emirates 54 3457 

Saudi Arabia 27 4246 Qatar 18 3920 

Kuwait 14 1348 

Lebanon 9 298 

Venezuela 3 4 

Bahrain 1 65 

Total 121 13338 

*Country totals add to more than 121 because five transactions involved multiple countries. 

36 
Sector 2016-2017 Transactions Known Transaction Value ($ million) 

Information Technology 34 6065 

Real Estate 22 3452 

Consumer Discretionary 18 1120 

Industrials 11 325 

Health Care 9 487 Financials 7 493 

Unknown 6 774 

Communication Services 6 407 

Materials 3 130 

Consumer Staoles 2 72 

Enerqv 2 6 Utilities 1 6 

Total 121 13338 

2. National Security Effects of the Subject M&A Transactions 

Each of the 121 transactions was either formally reviewed by CFIUS under Section 721 or 

pursuant to procedures followed by CFIUS and its member agencies regarding non-notified 

transactions. According to these procedures, CFIUS agencies monitor M&A activity and identify 

those transactions that have not been voluntarily notified to CFIUS, but which may present 

national security considerations. 

If CFIUS believes that a non-notified transaction may raise national security considerations and 

may also be a covered transaction, CFIUS contacts the parties and requests additional 

information regarding the transaction. If CFIUS determines, after evaluating this additional 

information, that the transaction is covered and that it may raise national security 

considerations, CFIUS requests the parties file a notice. In most instances in which CFIUS has 

requested additional information regarding a transaction, the parties responded by filing a 

voluntary notice. However, should the parties decide they will not file a notice after CFIUS 

requests they do so, any CFIUS agency may initiate a review of the transaction. 

37 
regulations, as they were determined to be the most reliable and accurate means of identifying 

critical technologies. 

"§ 800.209 Critical technologies. 

The term critical technologies means: 

(a) Defense articles or defense services covered by the United States Munitions List (USML), 

which is set forth in the International Traffic in Arms Regulations (ITAR) (22 C.F.R. parts 

120-130); 

(b) Those items specified on the Commerce Control List (CCL) set forth in Supplement 

No. 1 to part 774 of the Export Administration Regulations (EAR) (15 C.F.R. parts 730-774) 

that are controlled pursuant to multilateral regimes (i.e., for reasons of national security, 

chemical and biological weapons proliferation, nuclear nonproliferation, or missile 

technology), as well as those that are controlled for reasons of regional stability or 

surreptitious listening; 

(c) Specially designed and prepared nuclear equipment, parts and components, materials, 

software, and technology specified in the Assistance to Foreign Atomic Energy Activities 

regulations (10 C.F.R. part 810), and nuclear facilities, equipment, and material specified in 

the Export and Import of Nuclear Equipment and Materials regulations (10 C.F.R. part 11 0); 

and 

(d) Select agents and toxins specified in the Select Agents and Toxins regulations (7 C.F.R. 

part 331, 9 C.F.R. part 121, and 42 C.F.R. part 73)." 

B. Methodology and Data Sources Used to Assess Foreign Acquisitions of U.S. Critical 

Technology Companies 

The definition of critical technologies contained in section 800.209 is specific to the CFIUS 

regulations. Therefore, for purposes of Section II of this Annual Report, CFIUS agencies 

responsible for administering U.S. export control regulations analyzed all covered transactions 

filed with CFIUS in 2016 and 2017, and their agency's own internal records to identify those 

U.S. critical technology companies that were acquired by, or received significant investments 

from, foreign investors in 2016 and 2017. Because each export control regulation applies to a 

specific type of critical technology, the amount of information that could be analyzed for Section 

11 of this Annual Report was limited. 

11 This section describes CFIUS policies before the 2018 passage of FIRRMA. 

38 
approach enabled the Department of State to identify covered transactions in 2016 and 2017 

involving U.S. critical technology companies that produce defense articles or services covered 

under the ITAR. 

31 C.F.R. § 800.209(b): This paragraph pertains to those items specified on the Department 

of Commerce's Control List (CCL), which is set forth in Supplement No. 1 to part 77 4 of the 

Export Administration Regulations (EAR) (15 C.F.R. parts 730-774). The items on the CCL 

are controlled pursuant to multilateral regimes (i.e., for reasons of national security, chemical 

and biological weapons proliferation, nuclear nonproliferation, or missile technology) as well 

as for reasons of regional stability or surreptitious listening. 

Firms producing items under the regulations specified in paragraph of 31 C.F.R. 

§ 800.209 are not required to register with the Department of Commerce, but, in many cases, 

must obtain a license from the Department of Commerce to export those items (including 

"deemed exports" to foreign nationals in the United States.) To identify acquisitions of 

companies producing items that fall under this part of the definition, the Department of 

Commerce analyzed all covered transactions filed with CFIUS in 2016 and 2017 and its internal 

agency records of export license applications. 

31 CFR § 800.209(c): This paragraph pertains to specially designed and prepared nuclear 

equipment, parts and components, materials, software, and technology specified in the 

Assistance to Foreign Atomic Energy Activities regulations (10 C.F.R. part 810), and nuclear 

facilities, equipment, and material specified in the Export and Import of Nuclear Equipment 

and Materials regulations (10 C.F.R. part 110). 

The Department of Energy used a similar approach to that adopted by the Department of 

Commerce. This entailed comparing a list of all covered transactions filed with CFIUS in 2016 

and 2017 against export authorizations issued under 10 C.F.R. part 810 and export license 

requests issued by the Nuclear Regulatory Commission under 1 0 C.F.R. part 110. 

31 C.F.R. § 800.209(d): This paragraph pertains to select agents and toxins specified in the 

Select Agents and Toxins regulations (7 C.F.R. part 331, 9 CFR 

part 121, and 42 C.F.R. part 73). 

The agents and toxins specified in this paragraph are generally subject to export controls 

administered by the Department of Commerce. Accordingly, the methodology used by the 

Department of Commerce would be the same as that described above. 

39 
o CFIUS agencies concentrated on foreign direct investment through M&A of 

companies involved in all critical technologies, regardless of industry. 

o CFIUS agencies did not attempt to evaluate issues relating to other avenues of 

foreign access to U.S. critical technologies, such as licensing, contracting, or other 

arrangements that are not M&A transactions. 

Assessing illicit attempts by government intelligence services of major economic competitors to 

obtain military and dual-use critical technologies. 

o CFIUS agencies did not attempt to evaluate foreign espionage in areas other than 

dual-use, military, or other U.S. critical technologies, or against companies not 

headquartered in the United States. 

o In addition, CFIUS agencies reviewed available information about other countries 

that have historically sought information on critical technologies through the use of 

those countries' intelligence services. 

D. Defining "Coordinated Strategy" for Purposes of Section II of this Annual Report 

CFIUS agencies continue to use the following definition of "coordinated strategy." 

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. companies with 

critical technologies. The efforts of a single company in pursuit of business goals, absent 

indications of specific government direction, 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. 

o 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 

government-controlled firms; or 

The provision of narrowly targeted incentives by foreign governments or 

foreign-controlled firms (e.g., grants, concessionary loans, or tax breaks), 

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• International Trade Administration • National Telecommunications and Information Administration 

Department of Energy 

Department of State 

• Bureau of Economic and Business Affairs 

• Bureau of Political-Military Affairs • Bureau of International Security and Nonproliferation 

Department of the Treasury 

Intelligence Community Elements 

• Office of the Director of National Intelligence, National Intelligence Council 

• Air Force Office of Special Investigations 

• Army Counterintelligence Center 

• Central Intelligence Agency • Defense Intelligence Agency 

• Federal Bureau of Investigation, National Security Branch 

• Department of Energy, Office of Intelligence and Counterintelligence 

• Department of Homeland Security, Office of Intelligence and Analysis 

• Department of State, Bureau of Intelligence and Research 

• Department of the Treasury, Office of Intelligence and Analysis 

• • Marine Corps Intelligence Activity • Office of the National Counterintelligence Executive, Community Acquisition Risk Section 

• National Counterterrorism Center 

• National Geospatial-lntelligence Agency • National Security Agency 

• Naval Intelligence (Office of Naval Intelligence and Naval Criminal Investigative Service) 

Executive Office of the President 

• Council of Economic Advisors 

• National Security Council 

• Office of Science and Technology Policy 

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