INTRODUCTION
Current regulatory issues in the US and Europe center on significant divergence, with Europe pushing extensive new digital (AI Act, DSA, DMA, DFA), environmental (EUDR), and data privacy rules, causing transatlantic friction, while the U.S. under Trump accelerates broad deregulation and reduces enforcement, creating compliance challenges for multinational firms caught between stricter EU standards and a looser US environment. Key themes include tech competition, digital sovereignty, sustainable supply chains, and data fairness, with debates over innovation vs. protectionism.
UNITED STATES
January 2026
- US Orders HieFo to Divest Emcore Indium Phosphide Assets
On January 2nd, 2026, President Donal Trump issued an executive order requiring HieFo Corporation, a Delaware-registered company, to divest assets from EMCORE Corporation’s digital chip business due to national security risks. The executive order is the result of a review by the Committee on Foreign Investment in the United States (CFIUS) which determined that the acquisition represented a national security risk. According to CFIUS, EMCORE, a foreign-controlled company, may gain access to sensitive intellectual property, proprietary know-how, and technical expertise related to the manufacture of specialized chips.
- The Outbound Investment Security Program – EO 14105 (OISP)
Pursuant to Executive Order 14105 US Persons are prohibited from engaging in, or are required to provide notification to Treasury of, certain investments involving persons of so-called “Countries of Concern” (currently, the People’s Republic of China, including the Special Administrative Regions of Hong Kong and Macau) that operate in certain technology sectors (Covered Foreign Persons and such transactions involving Covered Foreign Persons, Covered Transactions).[1]The transactions covered by the OISP include semiconductors, microelectronics, quantum information technologies, or artificial intelligence. The 2026 National Defense Authorization Act (NDAA) included the codification of Outbound Investment Security Program Executive Order 14105. On December 18, 2025, President Donald Trump signed the National Defense Authorization Act for Fiscal Year 2026 (the “NDAA”). The NDAA includes the Comprehensive Outbound Investment National Security Act of 2025 (“COINS”), which codifies updates to the existing Outbound Investment Regulations (“OIR”) at 31 CFR Part 850. What does this mean for foreign investors? Increased Oversight: U.S. outbound investment in sensitive technologies and countries faces stricter scrutiny.
Due Diligence: Investors need to update their compliance programs for transactions involving covered sectors and countries.
Monitoring Regulations: The upcoming Treasury regulations will provide specifics on compliance requirements.
[1] https://www.mwe.com/insights/us-treasurys-outbound-investment-security-program/
EUROPE
January 2026
- Digital Regulation and AI
The EU’s comprehensive digital framework, which includes the AI Act, the Digital Services Act (DSA), the Digital Markets Act (DMA), and the Data Act, is actively being enforced and implemented through a phased approach across 2025 and 2026. This framework adopts a risk-based approach to technology governance, with significant obligations now in effect.
Key Regulations and Enforcement Status
EU AI Act: The world’s first comprehensive legal framework for AI is being implemented in stages.
Prohibitions: Since February 2, 2025, AI practices considered an “unacceptable risk” are banned, including social scoring by public authorities and emotion recognition in workplaces and educational institutions.
General-Purpose AI (GPAI): As of August 2, 2025, providers of GPAI models face specific transparency and documentation obligations, such as creating technical documentation and publishing summaries of training data. The EU AI Office, now operational, oversees these models.
High-Risk Systems: The majority of rules for “high-risk” AI systems (e.g., in critical infrastructure, education, law enforcement) will become fully applicable and enforceable from August 2, 2026.
Penalties: Fines for non-compliance are substantial, reaching up to €35 million or 7% of global annual turnover for prohibited practices.
Data Act: Key obligations under the Data Act took effect on September 12, 2025. The Act aims to empower users (both consumers and businesses) with greater control over data generated by connected devices (IoT), facilitating data sharing and portability between service providers.
Digital Services Act (DSA) & Digital Markets Act (DMA): These high-profile regulations have been in effect for some time. The DSA focuses on consumer protection and transparency online, requiring platforms to promptly remove illegal content and be transparent about advertising algorithms. The DMA enforces fair competition among “gatekeeper” digital platforms, prohibiting self-preferencing and ensuring business users can access data generated on the platforms. Enforcement activity in 2026 is expected to be heightened and coordinated, especially concerning AI-generated content or manipulative practices falling under both the AI Act and DSA.
- The Nexperia Case
A public hearing has been scheduled in the Netherlands on January 14, 2026, before the Dutch Enterprise Chamber to consider whether to launch a formal investigation into alleged mismanagement at chipmaker Nexperia. This will be the first major public legal forum since the initial September 30, 2025, ruling in the long-running corporate and regulatory dispute.
Impact in Early 2026
Production Cuts: Carmakers, including Honda and German manufacturers, faced production slowdowns or suspensions in North America and Europe. Honda shuttered production at some of its plants over the holidays due to supply constraints and has recently confirmed that it will be extending its suspension at three of its Chinese facilities. Likewise, Honda expects “semiconductor shortages to reduce operating profit by approximately US$960m for the fiscal year ending March 2026.”[2]
Supply Chain Risk: The situation highlighted risks in relying on China for critical components, prompting reconsideration of supply chain strategies.
Legal & Political Action: A Dutch court hearing was set for January 14, 2026, to resolve the dispute, with the Dutch government defending its actions despite Chinese pressure.
Current Situation (Early 2026)
Uncertainty: The conflict continued into 2026, with elevated risks for component availability, particularly for the first quarter, as governments negotiated.
Industry Response: Automakers were actively seeking alternative chip sources, but replacing China as a supplier is challenging.
In essence, the Nexperia situation remains a significant geopolitical challenge affecting the automotive supply chain, with ongoing diplomatic and legal efforts to de-escalate the export restrictions in early 2026.
[2] https://sourceability.com/post/export-controls-on-nexperia-fuel-semiconductor-supply-chain-risk
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