The US Treasury Department said on Monday that the acquisition of Magnachip by a Chinese private equity firm posed "risks to national security", according to a report by Reuters.
Wise Road Capital in March agreed to acquire the system chip maker based in South Korea for US$1.4 billion.
The deal has been under review by authorities in the US and South Korea since then.
Magnaship on Monday said in its own SEC filing that it has received a letter from the US Treasury notifying them of their opposition.
Back in June, the deal had been put on hold by CIFUS, a sub-committee under the US Treasury, after beginning an investigation in May.
The deal now awaits a final decision by US President Joe Biden next month.
People familiar with the matter in South Korea said they expected the deal to fail as the Biden Administration has been putting pressure on China's intention to foster its own semiconductor industry.