(GRAPHIC/LI SHIGONG)

Chinese takeover of U.S. tech firms could prove beneficial to both countries, but will political concerns complicate things?

China's Tsinghua Unigroup Ltd. announced its plans to make a historic $23 billion offer for Boise, Idaho-based chipmaker Micron Technology Inc., which--if approved--would be the largest takeover of any foreign firm by a Chinese company. It's small change, though, compared to the $161 billion the Chinese Government has budgeted to spend on the chip industry over the next decade, according to McKinsey & Co., and the acquisition deal would give China highly desired technology to build memory chips for smartphones and computers.

In 2014, China spent more on importing chips than importing oil, according to a report of Xinhua News Agency, investing more than $231 billion. Helping domestic manufacturers to gain the technology to build smartphones is essential to maintaining the country's overall economic development and global competitiveness. China wants to be known for its hi-tech manufacturing, much as Japanese electronics brands came to dominate the global market in the 1990s.

Hot or Not?

By looking for a juicy acquisition of a struggling yet promising U.S. tech company, however, China is entering a world of strict scrutiny, amidst a market not used to such moves. Is the juice worth the squeeze for Unigroup?

If history is our guide, a deal seems highly unlikely between Unigroup and Micron. The United States has strict rules for foreign capital in its industries, especially from Chinese investors, market analysts told Bloomberg News. Micron is the world's fifth largest chipmaker by revenue and would give China instant entry to compete with global tech giants like Samsung, Toshiba and SK Hynix. Though Micron's profits have waned in the past year, the company is still seen as an important player in the domestic tech industry.

It's up to the Committee on Foreign Investment in the United States (CFIUS) to decide, an inter-agency task force that has the power to stop mergers that might endanger national security.

"It would be very challenging," Stewart Baker, a CFIUS expert with Steptoe & Johnson LLP told Reuters. "I won't say it's impossible."

The committee has already expressed concerns about Chinese government-backed tech firms investing in U.S. industries, especially as the use of "backdoors" becomes more common--encrypted access points that allow easy surveillance of a system's users. While Washington has decried Beijing's moves to force tech firms to install backdoors and share the encryption keys with the government, the United States has also been accused of cyber snooping. Documents leaked by former NSA contractor Edward Snowden revealed that the National Security Agency was building backdoors into Huawei Technologies equipment to monitor communications. This is exactly what Congress had accused the Chinese Government of doing on equipment in the United States.

Still, in the eyes of CFIUS, if smart chips made by a Chinese government-backed manufacturer had these backdoors, "What mischief could you do?" pondered CFIUS expert Paul Marquardt of Cleary Gottlieb.

"This [deal] seems highly unlikely, just given the technology that's involved. This is a massive deal, really important technology and quite frankly, it's the Chinese," Reed Smith partner Leigh Hansson, head of the International Trade & National Security practice, told Reuters.

CFIUS has blocked plenty of U.S.-China tech deals, requiring Chinese networking company Huawei to divest 3Leaf Systems in 2011 and blocking its purchase of 3Com Corp. stock in 2008 over concerns between Huawei's founder and his ties to China's military. The U.S. Government requires any government agencies or "highly regulated" industries to have "end-to-end control" of their technology. Therefore Micron--the last major U.S. maker of memory and storage chips used in PCs, workstations, smartphones, tablets and cameras--could lose its contracts with such U.S. agencies if it comes under foreign ownership. Micron makes chip components that are used by military, defense, law enforcement, government, corporate and consumer agencies.

Tech may be one of the last areas of cooperation between Chinese and U.S. companies. It's an area that is still very sensitive to U.S. lawmakers. They consider an acquisition of Micron a matter of national security as the chip manufacturer claims to have the broadest memory solutions portfolio in the semiconductor industry and holds more than 20,000 patents.

Unigroup already has several links to major U.S. companies, however. The tech firm acquired a controlling stake in Hewlett-Packard's China networking equipment unit in May and tech giant Intel announced last year it would buy a 20-percent stake in Unigroup for $1.5 billion.