Fairchild Semiconductor said on Tuesday that its board has rejected the acquisition proposal from Hua Capital Management and China Resources Microelectronics Ltd. The board of Fairchild decided that the unsolicited offer, which it received from the Chinese buyers on December 28, 2015, is not a "Superior Proposal."

On January 5, 2016, Fairchild said that it received a revised unsolicited offer from the Chinese enterprises to acquire its shares for $21.70 a share in cash. The California-based chip-maker turned off the proposal from the Chinese buyers on fears that the deal will not be approved by the US regulators. The move by Fairchild highlights the challenges facing Chinese investors and consortium to acquire assets in the US.

After a thorough review process and consultation with its financial and legal guides, the board of Fairchild decided to forbid the takeover offer from the Chinese consortium. However, the semiconductor firm decided to take the offer from its US-based peer ON Semiconductor.

Fairchild signed an "Agreement and Plan of Merger" to be acquired by ON Semiconductor for $20 a share in an all cash offer worth at about $2.4 billion. The merger enables ON Semiconductor to become a strong leader in the semiconductor industry with joint revenue of about $5 billion.

The acquisition of Fairchild is expected to be accretive to ON Semiconductor's non-GAAP EPS immediately after the closure of the deal. With regard to this acquisition deal, Fairchild has filed an amended Schedule 14D-9 with the SEC. Goldman Sachs & Co is serving as a financial advisor for Fairchild, while Rosen & Katz, Lipton and Wachtell are acting as its legal counsel.

Fairchild's decision to turn down the offer from Chinese consortium might upset ChemChina, which has intended to acquire Syngenta for $44 billion, according to The Financial Times. The agribusiness firm has long been convincing Washington politicians that its purchase of Syngenta that has a US presence will not affect the security system in the US.

In January 2016, the Committee on Foreign Investment in the US stopped Philips' sale of lighting sector to a Chinese firm in a deal worth around $3.1 billion, citing "unforeseen concerns". Similarly, a $23 billion worth planned offer for Micron by a Chinese semiconductor business, Tsinghua Unigroup, was blocked last year as there was no confidence in the completion of the deal.

The number of Chinese firms trying to purchase foreign chipmakers increased to 21 in 2015 from only 8 in 2010, The New York Times said quoting a data from Dealogic. Chinese offer for American firms are likely to rise amid poor climatic conditions and flagging economy of China. As a result, the Committee on Foreign Investment in the US (Cfius) has decided to focus more on these deals in order to safeguard the national security.

The nation's stern security rule is preventing Chinese enterprises to enter the US market. The Chinese investors are facing hard times in getting approval from the US regulators. Fairchild's decision is an example for this approach by the US government.