(Yicai Global) Feb. 23 -- The Committee on Foreign Investment in the United States (CFIUS) blocked the USD580 million sale of U.S. semiconductor testing company Xcerra Corp. to Chinese state-backed semiconductor investment fund Hubei Xinyan Equity Investment Partnership, Xcerra said yesterday, as sina.com.cn reported.

The acquisition of Xcerra by Hubei Xinyan was deemed a key test of the ability of Chinese firms to acquire US technology assets, because the company does not make chips itself, but provides testing equipment used in making semiconductors.

"While we are disappointed that we were not able to receive approval from CFIUS on this transaction, Xcerra and Hubei Xinyan are discussing alternatives to pursue opportunities in new and existing markets in China," Xcerra Chief Executive Dave Tacelli said.

CFIUS scotched the deal because it was concerned that Xcerra equipment was used by chip makers in the US government and military supply chain, said an insider unwilling to be identified. Per their merger contract, Hubei Xinyan will not have to pay Xcerra the breakup fee customary in such deals since CFIUS blocked the deal.