Germany prevents the takeover of a semiconductor factory by Chinese capital: “We must not be naive”

Germany prevents the takeover of a semiconductor factory by Chinese capital: “We must not be naive”

The German government has blocked the purchase of a semiconductor factory by a Chinese-owned Swedish company. This was announced by the Ministry of Economy at a time when Berlin is trying to be less dependent on Beijing in strategic areas.

“China is and must remain a trading partner. However, we must not be naive and we must see whether trade and market interests risk being used for power politics, against the interests of the Federal Republic from Germany”German Economy Minister Robert Habeck told the press.

The government of Olaf Scholz endorsed this decision on Wednesday in the Council of Ministers.

Protect strategic sectors

The Swedish group Silex, owned by the Chinese group Sai MicroElectrics, was a candidate for the takeover of this factory of the German manufacturer Elmos located in Dortmund and producing “wafers”these very thin slices used to manufacture microelectronic components.

“Germany, as Europe’s largest economy, is attractive (…) but there may also be investments that can harm the security of our country”, justified the Ministry of the Economy. Potentially critical sectors such as semiconductor production were to be considered sensitive and potential Chinese investment in these sectors should cross thresholds. “higher hurdles” to obtain government approval, defended Minister Habeck.

German intelligence, under the authority of the Ministry of the Interior, had advised against the acquisition of the Elmos company that Berlin initially intended to approve. Elmos, which produces semiconductors mainly for the automotive industry, announced at the end of 2021 that it would sell its Dortmund factory for 85 million euros to Silex.

17 other projects under review

Semiconductors, whose production is dominated by Asia, are considered a strategic industry by Europeans, who wish to increase their sovereignty. The business daily Handelsblatt spoke on Wednesday morning of another project likely to be blocked by Berlin, the takeover by Chinese capital of the Bavarian company ERS Electronics, which supplies tools to semiconductor factories.

Asked about this case, Mr. Habeck declined to comment, citing the “trade secret”“.

At the end of October, Berlin had caused controversy by authorizing a Chinese investment in a port terminal in Hamburg, even if the share sold had been limited in order to prevent any influence in the strategic decisions of the company. There are currently 44 foreign investment projects in Germany under consideration, 17 of which come from China, according to the entourage of the Ministry of Economy.