(Reuters) - U.S. LED lighting maker Cree Inc (CREE.O) said it would terminate a deal to sell its Wolfspeed Power and RF division to German chipmaker Infineon Technologies AG (IFXGn.DE), citing security concerns raised by the U.S. government.
Cree and Infineon have not been able to identify alternatives to address the security concerns, Cree said on Thursday.
The Wolfspeed division makes devices using gallium nitride, a sensitive powdery compound with military applications whose use by other companies has led the United States to block deals.
Infineon, which agreed to buy Wolfspeed in July last year for $850 million, said earlier in the day that it did not expect to be able to salvage the purchase.
Infineon will pay a termination fee of $12.5 million, Cree said.
Reporting by Rishika Sadam in Bengaluru; Editing by Sriraj Kalluvila