The Big Picture |
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The White House used the Defense Production Act on January 2, 2026 to order HieFo Corporation to divest certain EMCORE chip and wafer businesses it bought on April 30, 2024, saying there is “credible evidence” the deal threatens national security. The order imposes tight deadlines and controls: HieFo must stop sharing non‑public technical information immediately, put CFIUS‑approved controls in place within 7 days, notify CFIUS of any proposed buyer and wait 30 days before sale, certify progress weekly, and complete divestment within 180 days unless extended; CFIUS has 90 days to verify. At the same time, the Small Business Administration finalized SBIC rule changes effective February 2, 2026 that update definitions for “critical minerals” and “critical technology,” remove obsolete rules, permit longer financing for mining and processing projects, and speed approvals for experienced managers — changes that affect about 318 active SBICs and the applicants who rely on the program.
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Put simply: the administration is both tightening screens on foreign control of advanced manufacturing and nudging U.S. investment toward critical materials and technologies. That matters because it affects who can own or finance sensitive chip and materials capacity, how quickly small funds can back projects that support supply chains, and the speed of government oversight and enforcement. The actions signal a shift from passive review toward active intervention and industrial stewardship: immediate operational controls, strict reporting and verification timelines (7 days, 30 days, weekly certifications, 90‑day verifications, 180‑day divestment), plus regulatory changes to channel roughly $7 billion in SBIC capital (2024 level) more directly into priority sectors. The White House’s claim of “credible evidence” is the government’s determination and could be contested, but the order is an enforceable executive action with concrete near‑term requirements.
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Pattern to Watch |
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Both items point to a rising policy pattern: tighter national‑security screening of foreign investment paired with targeted domestic finance reforms to shore up critical supply chains. Indicators are explicit — use of section 721 of the Defense Production Act to force divestiture (EO dated Jan 2, 2026, with 180‑day divestment and short deadlines for controls) and SBIC rule changes effective Feb 2, 2026 that broaden funding options for critical minerals and technologies and speed fund approvals (affecting ~318 SBICs, with SBICs having invested about $7 billion in 2024). If this trend continues, expect more executive interventions in deals involving advanced manufacturing and more regulatory moves to direct private capital into domestic critical‑tech and materials projects. Concrete signs of escalation would include additional DPA or CFIUS actions against foreign buyers, new rules tying federal financing to domestic content or ownership, or further explicit guidance directing SBIC and other credit programs to prioritize specific technologies or mining projects.
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