Semiconductors: why has Germany just blocked the sale of a factory to China?

It’s a rare decision. The German government has just blocked the sale of a factory of the Elmos Semiconductor group to Silex, a Swedish subsidiary of the Chinese company Sia Microelectronics. Elmos Semiconductor manufactures electronic chips for the automotive market.

National security at stake

The German executive justified its decision in a during a briefing. According to him, this acquisition constitutes a danger to “Germany’s security”. In addition, an approval of the sale “under certain conditions” would not have “sufficient to counter the perceived dangers” by the country. For the Minister of the Economy, Robert Habeck, it is essential for Germany “to look closely at takeovers involving significant infrastructure or where there is a risk of technology transfer to buyers in non-EU countries”.

In his words, it is important that the technology industry, and in particular the semiconductor industry, is protected within Germany, and more generally in Europe. “Germany is and will naturally remain an open investment destination, but we are not naive”added the minister.

The Silex company announced in December 2021 the upcoming takeover of an Elmos group factory based in Dortmund for the tidy sum of 85 million euros. The German group reacted to the government’s decision in a press release. Elmos regrets this opportunity and advises that “the transfer of new micromechanical technologies (…) from Sweden and significant investments at the Dortmund site would have strengthened the production of semiconductors in Germany”. For its part, the Chinese Sia Microelectronics expresses “deep regret” following this political decision.

ERS Electronic also concerned

According The gallery, the German Economy Ministry relied on recommendations from intelligence services before imposing the ban on the sale. At the same time, the government of Olaf Scholz would also have chosen to veto the takeover of the company ERS Electronic by a Chinese company for the time being unknown. ERS Electronic manufactures thermal management solutions for the semiconductor industry.

These bans, notable in a country with a liberal economy, come a few days before the meeting between Joe Biden and Xi Jinping. The latter aims to calm relations between the two countries, particularly on the issue of semiconductors.

Related Articles

Back to top button