By Maria Sheahan
FRANKFURT (Reuters) - German semiconductor chipmaking machinery company Aixtron <AIXGn.DE> may sell off part of its business, its chief executive said in an interview published on Friday, opening the door for bidders after a deal with a Chinese company collapsed.
China's Fujian Grand Chip Investment Fund dropped its 670 million-euro ($712 million) bid for Aixtron earlier this week after the United States blocked the deal on security grounds, throwing the German company's future into doubt.
"There are two options: First, we could hope that the markets for our products recover and continue investing high sums in new equipment. But that would come with high development and ramp-up costs, and risks," Martin Goetzeler told German daily Handelsblatt.
"Or Aixtron could shrink, divest technologies and continue with a specialized offering," he said.
Aixtron makes devices which produce crystalline layers from gallium nitride that are used as semiconductors in weapons systems.
Its technology is being used to upgrade U.S. and foreign-owned Patriot missile defense systems and the U.S. Treasury said the deal had been blocked due to national security risks.
China's Ministry of Commerce (MOFCOM) criticized the United States on Friday for thwarting the deal. "The U.S., in the name of national security, frequently departs from market and commercial principles to interfere with normal business activity," an MOFCOM spokesman said.
Goetzeler said the German government had signaled a willingness to help Aixtron, for example by giving Aixtron a central role in an investment program for the micro-electronics sector.
A spokesman for Germany's Economy Ministry said he had no knowledge of any such indications. He said there were existing support schemes for research and development Aixtron could apply for if it fulfilled the requirements.
Goetzeler also put a positive spin on the collapse of the deal, saying the United States' opposition had highlighted the German firm's importance in the sector.
"Aixtron is of central interest both to Germany and to the United States, the world's leading economy. If we needed more proof that our products have intrinsic value, we have it now," he said in the Handelsblatt interview.
But analysts have said Aixtron's future as a stand-alone company looked bleak because it is struggling to compete in an overcrowded market where Chinese companies call the shots.
"Aixtron's management has to find other financial or strategic investors in order to maintain its strategy of heavily investing in future technologies like OLED (organic light-emitting diodes)," DZ Bank analyst Harald Schnitzer said.
The German company has been trying to return to profit and take back leadership of the global market for LED chip-making equipment from U.S. rival Veeco Instruments <VECO.O>.
According to Aixtron's most recent annual financial report, Veeco held a 53 percent share of the market for the equipment, used to make LEDs, in 2014, while Aixtron had 41 percent.
Aixtron executives have said that without the Fujian deal the company would have to choose between investing its scant funds in new technology and hope for a recovery in demand, or shrink its business and workforce.
(Additional reporting by Gernot Heller in Berlin; Writing by Maria Sheahan and Christoph Steitz; Editing by Greg Mahlich and Jane Merriman)