Germany blocks sale of chip factory to China over security fears - CNN

London/Berlin CNN Business  — 

The German government has blocked the merchantability of 1 of its semiconductor factories to a Chinese-owned tech institution due to the fact that of information concerns.

Germany’s economical ministry said successful a connection that it had prohibited Elmos Semiconductor, which makes chips for the automotive industry, from selling its mill in Dortmund to Silex, a Swedish subsidiary of China’s Sai Microelectronics.

The determination had been taken “because the acquisition would person endangered the nationalist bid and information of Germany,” the ministry said successful a statement.

Silex announced successful December that it had signed an statement with Elmos to bargain the mill for €85 cardinal ($85.4 million).

Silex did not instantly respond to CNN Business’ petition for comment. Elmos said successful a connection that some companies regretted the government’s decision.

“The transportation of caller micromechanics technologies … from Sweden and important investments successful the Dortmund determination would person strengthened semiconductor accumulation successful Germany,” Elmos said, adding that it was considering whether to instrumentality ineligible action.

Sia Microelectronics said successful a connection Thursday that it “deeply regretted” the determination by the German government. Its shares fell much than 9% successful Shenzhen.

“We person to instrumentality a adjacent look astatine institution acquisitions erstwhile important infrastructure is progressive oregon erstwhile determination is simply a hazard of exertion flowing to acquirers from non-EU countries,” German system curate Robert Habeck said astatine a property conference.

He added that the semiconductor manufacture successful Europe, successful particular, needed to defender its “technological and economical sovereignty.”

The planned woody had rattled German authorities acrophobic that Chinese investment successful its captious infrastructure could compromise its intelligence spot and permission it exposed to governmental unit from Beijing.

Similar concerns motivated the German authorities to intervene successful plans by Chinese shipping elephantine Cosco to bargain a 35% involvement successful the relation of a Hamburg larboard terminal past month.

Officials constricted the planned concern successful Hamburger Hafen und Logistik to 24.9%. Several authorities ministers, including Habeck, has pushed for the woody to beryllium blocked entirely.

The tensions person arisen astatine a hard clip for the German economy, which is sliding into a recession triggered by the situation implicit Russian energy. Germany’s manufacturers and exporters are anxious to support their adjacent narration with China.

Only past week, Chancellor Olaf Scholz met with Chinese person Xi Jinping successful the archetypal sojourn by a G7 person to Beijing successful astir 3 years, a travel designed to enactment up export markets arsenic Germany’s ties with Russia — erstwhile its biggest supplier of earthy state — proceed to unravel.

A delegation of apical manufacture CEOs, including the bosses of Volkswagen (VLKAF), Siemens (SIEGY) and chemicals elephantine BASF (BASFY), traveled with Scholz to Beijing to conscionable with Chinese concern executives.

But Habeck struck a enactment of caution connected Wednesday. Addressing the blocked spot deal, helium stressed that “Germany is and volition stay an unfastened concern location” but that it was not “naive”.

The sojourn came conscionable a period aft the United States introduced stringent controls connected chip exports to China, a determination designed to support its nationalist information and bolster its home semiconductor industry.

In aboriginal October, the Biden medication banned Chinese firms from buying precocious chips and chip-making instrumentality without a license.

The rules endanger to onslaught a immense stroke to China’s ambitions to go a tech superpower arsenic they not lone barroom exports of chips made anyplace successful the satellite utilizing US technology, but besides the export of the tools utilized to marque them.

— Laura He contributed reporting.