Germany halts chip factory sale to China over security concerns

London / Berlin
CNN Business

The German government It blocked the sale of one of its semiconductor plants to a Chinese-owned technology company due to security concerns.

The German Economy Ministry said in a statement that it has banned Elmos Semiconductor, Which manufactures chips for the auto industry, from its factory sale in Dortmund for Silex, a Swedish subsidiary of China’s Sai Microelectronics.

The ministry said in a statement that the decision was taken “because the acquisition would have endangered the public order and public safety of Germany”.

Silex announced in December that it had signed an agreement with Elmos to buy the plant for 85 million euros ($85.4 million).

Silex did not immediately respond to CNN Business’s request for comment. Elmos said in a statement that the two companies regret the government’s decision.

“The transfer of new micro-mechanics technologies… from Sweden and significant investments in the Dortmund site would have boosted semiconductor production in Germany,” Elmos said, adding that he is considering legal action.

Sia Microelectronics said in a statement Thursday that it “deeply regrets” the German government’s decision. Its shares fell more than 9% in Shenzhen.

“We have to take a closer look at corporate takeovers when it comes to critical infrastructure or when there is a risk of technology flowing to buyers from countries outside the European Union,” German Economy Minister Robert Habeck said at a press conference.

He added that Europe’s semiconductor industry, in particular, needed to protect its “technological and economic supremacy”.

The planned deal has the German authorities worried about it Chinese investment Its critical infrastructure could jeopardize intellectual property and leave it vulnerable to political pressure from Beijing.

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Similar concerns prompted the German government to interfere with Chinese shipping giant Cosco’s plans to buy a 35% stake in the Hamburg port terminal operator last month.

Officials have limited the planned investment in Hamburger Hafen und Logistik to 24.9%. Several government ministers, including Habek, lobbied for the deal to be banned entirely.

The tensions arose at a difficult time for the German economy, which is sliding into a recession caused by the Russian energy crisis. German manufacturers and exporters are eager to maintain their close relationship with China.

Just last week, Chancellor Olaf Schultz Chinese leader Xi Jinping met On the G7 leader’s first visit to Beijing in nearly three years, it was a trip designed to support export markets as relations between Germany and Russia – once the largest supplier of natural gas – continued to unravel.

A delegation of top industry executives, including Volkswagen bosses


The chemical giant BASF

He traveled with Schulze to Beijing to meet with Chinese businessmen.

But Habeck scored a cautionary note on Wednesday. Speaking of the banned chip deal, he stressed that “Germany has been and will remain an open-ended investment site” but it was not “naive”.

The visit came just one month after the United States imposed strict controls on Chips exports to Chinaa move aimed at protecting its national security and boosting the domestic semiconductor industry.

In early October, the Biden administration banned Chinese companies from buying advanced chips and chip-making equipment without a license.

The rules threaten to deal a major blow to China’s ambitions to become a tech superpower because they not only prevent the export of chips made anywhere in the world using American technology, but also the export of tools used to make them.

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Laura He contributed to the report.

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