By Harro Ten Wolde and Irene Preisinger
MUNICH (Reuters) - Infineon signalled on Thursday that its $850 million purchase of Cree's Wolfspeed Power may collapse because of unspecified U.S. government security concerns.
Wolfspeed makes devices using gallium nitride, a sensitive powdery compound with military applications which has led the U.S. to block other deals.
Infineon Chief Executive Officer Rheinhard Ploss told the chipmaker's annual shareholder meeting there was "a very significant risk that we will not be able to complete the takeover as planned or possibly even at all".
The German company said on Feb. 8 that it feared the deal "as agreed" could fail, suggesting there may be room for remedies, but Ploss said that U.S. government security panel CFIUS, which said the deal posed a risk to U.S. security, had not suggested any measures to address its concerns.
Infineon is making a long-term bet on a new generation of chips as Wolfspeed helps to make electronic devices operate more efficiently as its products are smaller, thinner and faster, lowering power loss in the process.
These silicon carbide chips are expected to gradually replace conventional chips, particularly for on-board charging in electric and hybrid cars.
The Wolfspeed deal was announced last year and Infineon had said as recently as Feb. 2 it could close "any time soon".
If the deal does get blocked by CFIUS, it will follow the security panel preventing the acquisition of German chip equipment maker Aixtron by a Chinese buyer last year.
The $3.3 billion sale of Philips' lighting business, Lumileds, to a consortium of Chinese investors was blocked by CFIUS in January 2016.
(Editing by David Goodman and Alexander Smith)