TOP State chip manufacturer Tsinghua Unigroup Ltd. has signed a deal to acquire French smart chip components maker Linxens for about 2.2 billion euros (US$2.6 billion), five sources with direct knowledge of the matter said.

The deal, which the sources said was signed over a month ago but has not yet been announced publicly, will be a key test of European regulators’ stance on Chinese investment in the region that has been on the rise amid the country’s worsening trade relations with the United States.

Tsinghua’s acquisition of Linxens from private-equity group CVC is still pending regulatory clearance, three of the sources said, adding regulators in France, Germany and the company’s union need to approve the deal.

The authorities are not expected to object, the sources said. The deal would be the first overseas investment by the Chinese firm in two years.

According to three sources, Tsinghua has already locked in a deal with four banks for a 1.5-billion-euro bridge loan to fund the transaction.

The deal marks Tsinghua’s first offshore investment since three Taiwanese chip makers — Powertech Technology Inc., ChipMOS Technologies Inc. and Siliconware Precision Industries Co. — scrapped planned share sales totalling US$2.6 billion to the group in 2016 and 2017 after failing to get regulatory approval in time.

That followed a 2015 debacle when an informal US$23 billion approach for U.S. giant Micron Technology Inc. was rejected by the Idaho-based chipmaker amid national security concerns.

So far this year, China has spent US$45.5 billion on European assets, more than double year-ago levels, while its investments in the United States has dropped 75 percent to US$1.9 billion, according to Thomson Reuters data.

Linxens, headquartered close to Paris, has 535 million euros in annual sales and employs 3,500 staff at nine production sites globally. (SD-Agencies)