On July 31, 2023, the U.S. Treasury Department released its Annual Report to Congress on the Committee on Foreign Investment in the United States (“CFIUS” or “the Committee”), covering the 2022 calendar year (the “Report”).  The Report highlights key statistics and insights on the CFIUS process and foreign investments into the United States during 2022.

The Report provides helpful guidance on national security considerations related to foreign investment into the United States by illustrating transaction patterns on a sector- and region-specific basis.  The Report also provides broader judgments regarding business dealings in an evolving national security and regulatory compliance environment. 

Below are some key data points and insights:

U.S. Sector Statistics & Trends

• The Finance, Information, and Services sector was the top sector in terms of non-real estate Notices filed with the Committee. Within this sector, Professional, Scientific, and Technical Services continued to be the largest subsector.
  • The Committee’s focus on the Telecommunications sector reflects guidance from an Executive Order issued by the Biden Administration last year, which directed CFIUS to give greater weight to concerns around cybersecurity and corresponding “sensitive personal data” that could be exposed to a U.S. adversary through the sale of a U.S. entity. 
  • Additionally, within this sector, the Report shows an increase in filings in the Hospitals subsector (5 Notices filed this year versus 0 last year) and Administrative and Support Services subsector (6 Notices filed this year versus 1 last year), which may reflect growing concerns about potential CFIUS review.
• The Manufacturing sector accounted for the next highest sector of non-real estate Notices filed with the Committee. Within this sector, Computer and Electronic Product Manufacturing, remained the subsector with the most filings, which demonstrates the Committee’s broad scrutiny of transactions that pose a threat to U.S. technological leadership and the resilience of U.S. supply chains – especially with regard to semiconductors.
• The Support Activities for Agriculture and Forestry subsector, Oil and Gas Extraction subsector, and Specialty Trade Contractors subsector all saw increases in the proportion of Notice filings, becoming the next highest subsectors with 8 percent (3) Notices each in 2022.  
• These upward trends show greater attention from CFIUS on investments in the United States, especially within the context of multiple acquisitions or investments in any one sector to safeguard it from control by an adversarial foreign entity

Foreign Investment in the United States

• The Report shows Singapore as the top participant in Notice filings for 2022, resulting from a noticeable increase in U.S. investment from Singapore investors and a decline in U.S. investment from China. 
• Notices from China, Japan, and Singapore together accounted for approximately 29 percent of Notices filed from 2020 to 2022.  The distribution of Notices from these countries were generally consistent with the overall distribution of Notices across the four industry sectors although Canada had the most Notices in the Mining, Utilities and Construction sector, consistent with previous years’ reports.

Other Highlights

• Importantly, CFIUS noted that it evaluated 84 non-notified transactions in 2022, down from 135 in 2021.  Of the 84 transactions last year, 11 resulted in a request for filing.  Despite the decrease, the Committee is growing its staff to investigate non-notified transactions—which are among the most complicated transactions that CFIUS considers—and emphasizing the need for firms to evaluate whether or not they need to file a Notice in order to avoid civil penalties.  
• Notably, even though the number of Notices only increased by 14, the number of investigations increased by 32.  The Report also showed an increase in the average wait time to conclude a Notice, from 65 to 80 calendar days.

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