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Home News Germany blocks sale of chip factory to China: minister

Germany blocks sale of chip factory to China: minister

Published on 09/11/2022
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Germany on Wednesday blocked the sale of a chipmaker to a Chinese-owned firm because of a potential threat to security.

“We must look very closely at company takeovers when it relates to important infrastructure or when there is a danger that the technology would flow to buyers from non-EU countries,” said Economy Minister Robert Habeck.

Chinese company Sai MicroElectronics had been seeking to buy the Dortmund factory of Elmos through its Swedish subsidiary Silex.

The German government had rejected the planned takeover because “the purchase could endanger the order and security of Germany,” said the economy ministry.

Other modes of reducing the risks, including allowing the acquisition under certain conditions, were “unable to eliminate the identified dangers”, it added.

Fears have been growing in Europe’s economic powerhouse about an over-reliance on Beijing, and letting critical infrastructure fall into the hands of Chinese state-linked companies.

Russia’s invasion of Ukraine and its subsequent dwindling of crucial gas supplies to Europe has further accentuated the concerns.

In particular, the microchip industry has come under scrutiny, as it produces key components used across industry from consumer electronics to battery-powered vehicles.

Earlier this year, the European Union unveiled a multi-billion-euro “Chips Act” aimed at doubling Europe’s market share in semiconductors and dependence on supplies from Asia.

Elmos, which primarily builds components for the automobile industry, said late last year it intended to sell the production facility at its headquarters.

Silex was seeking to buy the site for 85 million euros (dollars).

Business daily Handelsblatt meanwhile reported on Wednesday that Germany was also poised to halt a planned takeover by a Chinese investor of Bavaria-based ERS Electronic, which supplies a cooling technology to wafer manufacturers.

Habeck said he could not comment on the case because of “trade secrets”.

He added that Germany remained open to investors, but that “we are also not naive”.

Habeck, of the ecologist Greens party, had already locked horns of late with Chancellor Olaf Scholz over investments from China.

He deeply opposed a plan by Chinese shipping firm Cosco to buy a stake in a Hamburg port terminal, forcing Scholz to pull rank to force through the deal by allowing the purchase of a reduced stake.

On a controversial visit to Beijing last week, Scholz, accompanied by a delegation of German business bosses, told Chinese leaders that Berlin expected equal treatment on trade.