U.S. semiconductor testing company Xcerra Corp. said that a U.S. national security panel has blocked its US$580-million sale to a Chinese state-backed semiconductor investment fund, the latest such deal to be thwarted.

Xcerra said Thursday that “despite our best efforts to secure approval,” it has become evident that the Committee on Foreign Investment in the United States (CFIUS) wouldn’t clear the transaction. CFIUS scrutinizes deals for potential national security concerns.

The acquisition of Norwood, Massachusetts-based Xcerra by Hubei Xinyan was seen as a key test of the ability of Chinese firms to acquire U.S. technology assets, because the company does not manufacture chips itself. Instead, it provides testing equipment used in the production of semiconductors.

The deal’s demise comes as the CFIUS has become increasingly skeptical of Chinese acquisitions of U.S. companies following the inauguration of U.S. President Donald Trump a year ago.

“While we are disappointed that we were not able to receive approval from CFIUS on this transaction, Xcerra and Xinyan are discussing alternatives to pursue opportunities in new and existing markets in China,” Xcerra CEO Dave Tacelli said in a statement.

CFIUS blocked the deal because it was concerned that Xcerra equipment was used by chip manufacturers that were part of the supply chain to the U.S. government and military, according to people familiar with the matter. (SD-Agencies)