China's Fujian Grand Chip Investment Fund has dropped its takeover bid for German chip equipment maker Aixtron after U.S. President Barack Obama blocked the deal.

Fujian's takeover vehicle Grand Chip Investment said on Thursday its offer had lapsed as it had failed to obtain U.S. regulatory approval for the purchase, which had been a condition of the deal.

Investors who had already accepted its takeover offer will have their shares returned on Dec. 13, it said.

Shares in Aixtron were down 3.1 percent at 3.78 euros by 1127 GMT, well below the 6 euros per share Grand Chip Investment offered in May.

Last week, Obama stopped Fujian from buying Aixtron U.S., the division of the German company in Silicon Valley where nearly a fifth of its 713-strong workforce is based.

While the 670 million euro ($723 million) deal was small, U.S. opposition was seen as a sign of growing concern in the West about the acquisition of new technology by Chinese players and comes after Washington blocked the sale by Philips of its U.S. lighting business to Asian buyers.

The German firm's technology is being used to upgrade both U.S. and foreign-owned Patriot missile defense systems and the U.S. Treasury Department said on Friday the deal had been blocked due to national security risks.

Aixtron may face a bleak future as a stand-alone company, having said it would need to cut costs and jobs if the deal failed so it could compete in an overcrowded market where Chinese companies call the shots.