InfineonTechnologies (IFNNY) shares plunged Thursday after the German chipmaker expressed concern that its acquisition of Wolfspeed from North Carolina-based Cree (CREE) - Get Report will collapse following a warning by U.S. authorities about the risks involved in the deal.

Shares in Infineon dropped 3.8% to change hands at €16.83 each by 9:15 a.m GMT, making it the second-biggest decliner on the DAX in Frankfurt. The stock has gained 7% over the past three months.

The Neubiberg-based maker of automotive semiconductors said Wednesday that the U.S. Treasury Department-led Committee on Foreign Investment informed Infineon and Cree that the $850 million deal would pose a risk to national security, and that it has not found any measures to mitigate the risk.

"Against this background, Infineon is of the opinion that there is a considerable risk that the transaction, as agreed, is not going to close," Infineon said.

A collapse of the deal will likely be a blow for Infineon, which has repeatedly expressed its hopes that Wolfspeed would contribute to the business, especially to its electric vehicle efforts. Silicon carbide is being increasingly used in the electrification of cars, and Infineon has said the acquisition of Wolfspeed will likely enable notable progress in the area.

The U.S. authorities' move to block deals citing national security concerns is not new.

In December, Fujian Grand Chip Investment Fund dropped its bid for German chip-making equipment supplier Aixtron after then-U.S. President Barack Obama took the recommendation of U.S. national security officials to block the Chinese investment fund from acquiring Aixtron's U.S. assets.

In January 2016, Royal Philips backed out of its $3.3 billion agreement to sell its Lumileds lighting components business to a Sino-U.S. consortium citing threat by CFIUS to recommend that Obama block that deal.

"The parties are exploring whether there are alternatives to modify the transaction to mitigate or address the regulatory concerns, which if agreed by the parties, would involve a refiling with CFIUS," Cree said in a separate statement. "There is no assurance that the parties could achieve a transaction structure which would obtain CFIUS clearance. As a result, pending the outcome of these efforts, the likelihood or timing of closing the transaction is uncertain."