Germany Prohibits Chinese Takeover of 2 Chipmakers, Citing Security Concerns

Semiconductor chips on a circuit board of a computer in a photo illustration taken on Feb. 25, 2022. (Florence Lo/Reuters)

Germany's government blocked on Nov. 9 the sale of two domestic semiconductor factories to Chinese-owned companies, citing security concerns.

"We have prohibited a non-Union investor from entering into business ventures in Germany," Economy Minister Robert Habeck told reporters in front of the German chancellor’s office on Nov. 9.

Habeck noted that the decision came because the "security of order in Germany must be protected and critical production areas require special protection."

Elmos Semiconductor, which makes chips for the automotive industry, was barred from selling its factory in Dortmund, Germany, to Silex, a Swedish subsidiary of China’s Sai Microelectronics.

In a Nov. 7 statement, Elmos stated that it had been warned by the German Economy Ministry that the sale to Silex would likely be prohibited, noting that this was a "recent development."

The company said it would examine the details after receiving the decision and decide on what further steps to take.

Silex announced in December 2021 that it had signed a sale and purchase agreement with Elmos to buy the factory for 85 million euros ($85.4 million), with the transaction expected to close in the second half of 2022, subject to customary closing conditions and regulatory approvals.

Rising Security Concerns

The decision by Germany's government comes amid rising concerns over European countries' dependence on Beijing and concerns that Chinese investment in its critical infrastructure could leave it exposed to national and economic security issues, as well as to political pressure from the Chinese communist regime.

Semiconductors are an essential component in everything from electronic devices such as mobile phones to electric vehicles.

Earlier this year, the European Union unveiled a multibillion-euro "Chips Act" aimed at bolstering Europe’s competitiveness and resilience in semiconductor technologies and applications and reducing its dependence on supplies from Asia.

"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," Habeck said, according to local reports.

He also noted that the sale of a second company had been turned down by the government, but he didn't name the companies involved, citing "trade secrets."

However, Germany’s minister for research, Bettina Stark-Watzinger, revealed the company to be Bavaria-based ERS Electronic, according to local reports. According to its official website, ERS Electronic supplies thermal wafer test technology to the semiconductor industry.

It's unclear which Chinese company was interested in buying the German firm.

ERS Electronic hasn't publicly commented on the matter. Company officials didn't respond to a request by The Epoch Times for comment by press time.

Germany's decision to halt the sale of the semiconductor factories comes as the country is facing a recession that has been further exacerbated by Russia's invasion of Ukraine and the subsequent energy crisis.

Last week, German Chancellor Olaf Scholz met with Chinese leader Xi Jinping for a meeting that focused on business ties between the two nations as Germany's relationship with Russia continues to deteriorate.