US President Barack Obama is reportedly set to block China's Grand Chip Investment GmbH from acquiring Germany's Aixtron SE, sources with knowledge about the matter told Bloomberg.

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Obama is allegedly poised to uphold a recommendation by the Committee on Foreign Investment in the US (CFIUS) on Friday to halt the $714 million acquisition deal between the Chinese firm and Aixtron.

"It will be extremely difficult for China's state-owned enterprises to do deals in the semiconductor industry looking forward," He Weiwen, Center for China and Globalization's deputy director, said. "It definitely posts a negative impact on China-U.S. relations, but the damage is limited."

According to MarketWatch, Aixtron revealed last month that the CFIUS has advised the chip-equipment maker to abandon the agreement because of "unresolved US national security concerns." It further said that the authority planned to recommend that Obama block the deal as there are no other ways to mitigate concerns.

Obama's decision is crucial for the Sino-US relations as incoming President Donald Trump has been open on his negative views about China. The president-elect not only accused the mainland of practicing unfair trades but also threatened to impose high tariffs on Chinese goods.

Meanwhile, the CFIUS noted that US pays particular attention on foreign buyers making purchases in the fields of technology, particularly in the defense applications sector. Aixtron apparently has a subsidiary in California, which generates around 20 percent of its sales and employs at least 100 people.

If the report is confirmed, this will be the third time the White House has refused an overseas investment in over 25 years and Obama's second rejection because of national security risks. Obama initially interrupted China's Ralls Corp. from developing a wind farm in Oregon in 2012.

TagsAixtron, Grand Chip Investment GmbH, Aixtron News, Aixtron Acquisition, Aixtron takeover