Latest available data demonstrates the unpredictable FDI climate.
In half of the jurisdictions we analyzed, over 98% of deals notified were cleared without remedies. In the remainder, intervention rates were higher but, for the most part, still less than 10%.
On timing, as in previous years, most assessments are completed within three months. But for transactions raising concerns, FDI review periods can be significantly longer, impacting deal timetables and increasing execution risk.
Expanding sectoral reach
Investments in the defense sector continue to face intense FDI scrutiny and intervention in the jurisdictions surveyed. Transactions involving critical technologies, including semiconductors and other microelectronics, are increasingly in scope and being looked at closely.
But other sectors are also in the FDI spotlight as the nature of governments’ concerns continue to extend. Canada, for example, has recently added economic security as a factor to be considered during a national security review. The UK has similarly made a clear political statement that “economic security is national security.” The U.S. now considers a transaction’s impact on supply chain security and cybersecurity.
Several energy-related transactions were abandoned last year due to delays and execution risk caused by FDI reviews. We also saw intervention in transport, banking, and food supply chain investments.
CFIUS focuses on China and unwinds deals
The Committee on Foreign Investment in the United States (CFIUS) continues to insist on national security agreements as a condition for clearance in some cases.
In its America First Investment Policy (discussed further below), the Trump administration indicated it would shift away from using these mitigation measures in favor of a more binary “approve or reject” approach.
The data from 2024 suggests CFIUS had already started moving away from open-ended mitigation. It remains to be seen how far this has played out in practice—we await the publication of CFIUS’s annual report for 2025.
There is also evidence of a more “transactional” approach to reviews and approvals, with politics playing a role in some high-profile cases.
Early in 2025, President Trump reversed Biden’s prohibition of Nippon Steel’s acquisition of U.S. Steel. The U.S. government took a “golden share” in U.S. Steel as part of the approval, giving it a veto right over decisions such as plant closures, the transfer of jobs overseas, supply chains, and future acquisitions.
The administration has also shown its willingness to unwind completed transactions.
CFIUS ordered China’s Suirui Group to divest its acquisition of tech firm Jupiter five years after closing. Suirui now faces a Department of Justice suit for allegedly failing to meet the deadline to make the sale—the first time the agency has sued a firm for failing to comply with a CFIUS prohibition order. Suirui was also required to destroy or divest all source code and IP developed by Jupiter while under Chinese ownership, and immediately put in place firewalls to prevent access to Jupiter’s data and systems.
This trend has continued into 2026, with the Committee requiring a China-controlled firm to divest semiconductor assets already acquired from Emcore.
As these two cases show, intense scrutiny of investment from China remains high on CFIUS’s agenda. This is particularly true of transactions in advanced technology sectors, including microelectronics and aviation.
The America First Investment Policy, introduced last February, reframed U.S. investment policy by inviting investment from traditional allies while seeking to address threats posed by China-related transactions.
The policy noted that it would “use all necessary legal instruments,” including CFIUS, to restrict China-affiliated investors from access to U.S. technology, critical infrastructure, healthcare and other sectors, as well as to protect U.S. farmland and real estate near “sensitive facilities.” The policy indicated a desire to strengthen CFIUS’s overall authority over “greenfield” investments, and to expand its jurisdiction over “emerging and foundational technologies.”
In 2026, we will likely see higher scrutiny by CFIUS of transactions in these sectors.
The U.S. Outbound Investment Security Program, which took effect in January 2025, also has a China focus. It prohibits or requires notification of certain outbound investments to Mainland China, Hong Kong, and Macau related to semiconductors and microelectronics, quantum information technologies, and AI systems.
The U.S. Congress recently passed the COINS Act, which expands the scope of the U.S. Outbound Investment Security Program to include additional sectors (high-performance computing/supercomputing and hypersonic systems) and countries of concern. We expect the U.S. Department of the Treasury to promulgate regulations codifying the COINS Act in late 2026 or early 2027.
A clean sweep in the EU
2025 was a landmark year for FDI in the EU.
All member states now have a national screening mechanism. In the past 12 months, regimes took effect in Ireland, Greece, Bulgaria, and Croatia. Cyprus is the only EU jurisdiction whose rules—enacted in October 2025—are not yet operational. They are expected to kick in from April 2026.
Some member states proposed or adopted amendments to their regimes.
The Dutch government, for example, plans to expand the scope of investment screening to include AI and other critical technologies. In Poland, responsibility for reviewing FDI filings has shifted from the antitrust authority to a government minister, signaling a possible shift to a more political approach. And the German government has announced plans to consolidate and reform the country’s FDI rules, with draft legislation expected in mid-2026.
Overall, FDI intervention across the bloc remains low. The EC’s latest screening report confirmed that 86% of decisions in 2024 were clearances without conditions.
The EU FDI Regulation is set for a revamp after revisions were provisionally agreed in late 2025. The aim is to strengthen EU security and public order. It will also harmonize key aspects of national FDI regimes, requiring a common minimum sectoral scope, the ability to screen indirect foreign investments, and the alignment of certain procedural rules.
This should make cross-border deal planning more predictable. But national differences will remain, and final decisions will continue to be made at member state level.
A further shake up may be coming. The draft EU Industrial Accelerator Act, due to be published imminently, may introduce mandatory member state FDI screening of investments exceeding a specified level in certain strategic sectors. This could include batteries, electric vehicles, solar panels, and critical raw materials.
The rules would reportedly kick in for investment from countries that have more than 40% of global manufacturing capacity in the sector in question. They could impose restrictions on foreign ownership levels and require other commitments relating to, for example, R&D, workers, and EU-origin inputs.
The EC is also considering its approach to outbound investments. In January 2025, it called on member states to review and report on recent outbound investment from their jurisdictions relating to semiconductors, quantum technologies, and AI. Next steps are awaited.
UK open for business but will enforce
As part of its growth agenda, the UK government has been clear that it welcomes foreign investment, even in sensitive sectors of the UK economy.
But that does not mean enforcement is lax. In August, it blocked a graphene joint venture between a UK firm and a Chinese investor on national security grounds.
Eleven transactions required conditions in 2025. Some were novel and far reaching. To remedy national security concerns over a fire safety device deal, the government prohibited the target from developing or marketing Internet of Things devices (or doing so in partnership with entities incorporated outside a preapproved list) and restricted it from accessing certain data from such devices.
The UK courts again confirmed the government’s wide discretion to make decisions under the regime, refusing to overturn the 2024 prohibition of a semiconductor deal, despite finding the government’s final order did not contain sufficient reasons.
More broadly, the UK is planning to introduce new exemptions to cut regulatory burden for some acquisition structures (see below). At the same time, it is reassessing its sector priorities to target emerging risks by refining and expanding the list of sensitive sectors that are subject to mandatory notification.
Domestic acquirers in the firing line
In recent years, FDI interventions (in the U.S. and elsewhere) have concentrated on Chinese investment. 2025 was no exception.
However, there is an increasing focus on investment from so-called “friendly” jurisdictions, and even on acquisitions by domestic firms.
In Australia, we saw a U.S. bidder for a healthcare company fail to establish a Material Adverse Change (MAC) and subsequently change its intention regarding the continued operation of the target’s Australian manufacturing site. This resulted in the Treasurer of Australia refusing to approve the transaction, which was an unusual outcome, particularly given that the bidder was an established U.S. acquirer.
Italy intervened in a high-profile domestic banking merger. This case has attracted the attention of the EC, which is investigating whether the member state’s FDI powers enable unjustified interventions that are in breach of EU law.
Cutting red tape
Alive to the regulatory burden of FDI screening reviews, some governments are making moves to streamline regimes.
In Australia, proposals aim to speed up reviews, including an “automatic approval pathway” enabling low-risk investments to progress without waiting for approval. These are balanced against plans to introduce tougher sanctions for breach of the rules and to give ministers post-approval review powers.
Trump’s America First Investment Policy also contemplates a fast-track process to facilitate greater investment from specified allies and partners. The Treasury is currently seeking views on what form this process will take.
UK exemptions from mandatory notification for certain internal reorganizations, as well as the appointment of liquidators, special administrators, and official receivers, have been promised. They are expected imminently.
