AIXG Aixtron SE ADS, Each Representing One Ordinary Share

FRANKFURT—A Chinese takeover bid for Germany's Aixtron SE collapsed Thursday, a week after President Barack Obama blocked the deal on national security grounds, according to a statement from the buyer.

The contentious €670 million ($723 million) offer for the semiconductor company was thrown into question this fall when Germany's economic ministry raised security concerns about the bid, made by Fujian Grand Chip Investment Fund LP's German unit. These concerns were echoed by authorities in the U.S., resulting in last week's outright ban on the acquisition by President Obama.

Grand Chip on Thursday said the deal failed due to the U.S. ban. In recent days there had been speculation that the deal could go through if Aixtron were to divest its U.S. operations.

Under U.S. law, U.S. officials were able to block the takeover of Aixtron's U.S. subsidiary Aixtron Inc. A statement from Grand Chip said that this block meant the takeover offer wasn't fulfilled and caused the deal to collapse.

The deal failure highlights escalating tension between Beijing and Western governments about Chinese purchases of Western technology assets and follows a warning Tuesday from U.S. lawmakers about a proposed Chinese takeover of an U.S. semiconductor manufacturer.

Twenty-two House lawmaker lawmakers on Tuesday wrote to Treasury Secretary Jacob Lew raising concerns about the proposed purchase of Lattice Semiconductor Corp. by Canyon Bridge Capital Partners Inc., a new private-equity firm backed by investors in China.

The lawmakers warned Mr. Lew that Canyon Bridge appeared to be directly affiliated with the government of the People's Republic of China, according to a letter seen by the The Wall Street Journal. Security analysts raised similar concerns about Fujian Grand Chip Investment Fund's ownership structure, although China insists both takeovers are normal investment activities.

Security analysts have warned China is attempting to acquire sensitive Western semiconductor technology as pioneered by Aixtron and Lattice. People familiar with the work of CFIUS believe a semiconductor technology based on gallium nitride, or GaN, could have been the focus of security concerns in the Aixtron deal.

A spokeswoman for Germany's economy ministry said the removal of the offer by Grand Chip meant Berlin would no longer continue to review the case.

Germany has been the top European destination for Chinese M&A activity in 2016. Chinese companies have acquired German companies at the rate of about one a week since January, according to data provider Dealogic. Chinese companies have spent more than $11 billion on German companies this year, eclipsing the previous record of $2.6 billion in 2014.

Write to William Wilkes at william.wilkes@wsj.com

(END) Dow Jones Newswires

December 08, 2016 08:45 ET (13:45 GMT)

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