New Year, New Development: Fewer Industries May Be Affected By Proposed Outbound Investment Controls (Reverse CFIUS) – Inward/ Foreign Investment

Key Takeaways

• New outbound investment controls likely to focus on
  semiconductors, AI, and quantum computing.

• Biotechnology and battery technology investments overseas may
  not be subject to the upcoming proposed controls.

Occasionally, on our blog, we allow ourselves to indulge in
prognostication. Similarly, and also occasionally, we are wrong.
Nevertheless, we hope to distinguish ourselves by our candor and
admit our misses.¹

Last year, we speculated that we might ring in the new year with outbound investment
restrictions. Now, it appears that the Biden administration has
had other plans. As you all will have seen, the Biden
administration still has not issued the anticipated executive order
that would impose restrictions on outbound investments. Moreover,
the latest whispers are to expect further delay
and to expect restrictions that will likely be much more targeted
than the expansive controls that had been anticipated (with no
small amount of concern).

As detailed in our last blog on the potential outbound investment controls,
proposed legislation before Congress would target outbound
investments in a variety of industries, including energy, medical,
communications, defense, transportation, aerospace, robotics,
artificial intelligence, semiconductors, shipbuilding, and water.
At that time, we understood the Biden administration was racing to
issue an executive order before any legislation could get passed.
In addition, that executive order would target high-priority
technologies among other items.

We now understand that while the final executive order has not
been approved, the executive order will focus on quantum computing,
artificial intelligence (AI), and semiconductors. Moreover, the
executive order is reported to not include
biotechnology or battery technology.

What does this mean and when might you need to give it more
attention than an occasional blog-scan? Well, it means that private
equity firms, U.S. companies, and other investors seeking to make
outbound investments in quantum computing, AI, and semiconductors
should stay tuned because those parties could face restrictions and
administrative burdens on those activities in the coming months.
The Biden administration will be consulting allies and continue to
solicit feedback from think tanks and other partners before
fine-tuning the executive order.

But those looking at outbound investments in biotechnology or
battery technology may be able to put down the news clippings and
hop off the rollercoaster of outbound investment predictions, at
least for the next little while.

Footnote

1. Though, of course, we have explanations!

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about your specific circumstances.