Germany Blocks Chip Firm Sale Due to Security Concerns

RISC-V is overseen by a Swiss-based nonprofit foundation.

Germany has blocked the takeover of one of its microchip factories to a Chinese-owned company due to security concerns.

An $85-million offer to buy the Elmos chip company by a Swedish subsidiary of China’s Sai Microelectronics was prohibited this week because it would have “endangered public order and safety of Germany,” the country’s economic ministry said in a statement.

China was making a “a deliberate, strategic approach to influencing both knowledge discovery and production control, particularly in the area of semiconductor and microchip manufacturing,” Economy Minister Robert Habeck said.

The decisions came at a time of heightened sensitivity around relations between Berlin and Beijing.

China-Germany Relations

The government of Chancellor Olaf Scholz, who visited China last week, is trying to balance a push for access to the Chinese market for European companies by addressing security concerns and reducing Germany’s trade reliance on China.

Scholz has warned against decoupling from China or de-globalisation in general, while also emphasising the need for Germany to diversify its Asia trade and take strategic concerns more into account in its business dealings.

Scholz earlier had pushed through a decision to allow China to buy a minority stake in a terminal in Germany’s largest port despite opposition from within his coalition, such as Greens MPs like Habeck.

That decision sparked an angry response by the foreign ministry, which warned that the investment disproportionately expanded China’s strategic influence. China has previously dismissed such concerns.

‘Deep Regrets’

Sai Microelectronics said it “deeply regrets” the decision and will study the details to decide on any next steps.

“The company will continue to be optimistic about and attach importance to the automotive chip industry and related business,” the Shenzhen-listed chip developer and wafer maker said in a filing to the Shenzhen bourse.

Berlin also blocked investment in ERS Electronic, based in the southern state of Bavaria. A spokesperson for ERS Electronic said there was no plan to sell the company but it had been exploring the option of getting investment from a Chinese private equity firm.

Elmos, which is based in Dortmund, could not be reached for comment. A spokesperson for China’s foreign ministry said Beijing wanted a fair and open environment for Chinese investment.

Reuters with additional editing by Alfie Habershon.

US Has ‘No Right’ to Interfere in Our Deals With Germany: China

Germany May Block Chinese Takeover of Chip Factory – DW

Biden to Discuss Taiwan ‘Red Lines’ With Xi Jinping – SCMP

Alfie Habershon

Alfie is a Reporter at Asia Financial. He previously lived in Mumbai reporting on India's economy and healthcare for data journalism initiative IndiaSpend, as well as having worked for London based Tortoise Media.