CFIUS Annual Report Highlights Increasing National Security Scrutiny
The Committee on Foreign Investment in the United States ("CFIUS" or the "Committee") has released its Annual Report to Congress for 2025 (the "Report"), revealing an increased volume of CFIUS filings involving sensitive technologies, continued close scrutiny of investors from China, and an uptick in the withdrawal rate of notices in 2025.
The Report indicates that in 2025, CFIUS again increased the total volume of reviewed transactions, driven largely by additional short-form declarations. CFIUS required more information and time in reviews, requesting a full notice in 26% of these declarations, up from 15% in 2024. Notices withdrawn (and potentially refiled) increased 6% from 2024. CFIUS imposed mitigation for 25 notices in 2025 (similar to 2024) and was actively monitoring 234 mitigation agreements at year-end. The Committee used a range of mitigation types including Intellectual Property ("IP") and technology transfer restrictions, data storage controls, and facility localization requirements. CFIUS also continued its focus on "non-notified" transactions (i.e., transactions not filed with CFIUS), identifying thousands, investigating 90, and requesting a filing for nine.
The Report highlighted trends in submissions and review. Chinese investors remained the largest source of notices filed (17%); parties should continue to scrutinize ownership chains and plan accordingly. Certain sectors appeared to see a surge in reviews. The semiconductor manufacturing sector drew 17 notices—up from four in 2024—while aerospace and defense parts manufacturing accounted for 13 notices, more than double the six in 2024. Notably, the semiconductor spike represents a return to 2023 levels—when 16 notices were filed—rather than an unprecedented high, suggesting the 2024 dip may have been an anomaly.
The Report noted that appropriations lapses caused disruptions, including tolling of statutory deadlines for more than 120 days total. 2025 also saw the pilot launch of CFIUS's Known Investor initiative, intended to expedite reviews through engagement with repeat filers in advance of a filing. This program remains invitation-only at this time.
With heightened scrutiny and rising procedural complexity, transaction parties should continue to design timelines to account for CFIUS diligence and potential review (including possible delays in formal acceptance of a filing), seek to engage experienced CFIUS counsel early, and consider the effect of potential mitigation negotiations on transactions.
