Germany blocks another chip company acquisition

Germany blocks another chip company acquisition

Germany blocks another chip company acquisition

Germany has blocked another Chinese takeover of a local semiconductor company in a sign of a tougher government approach to protecting the high-tech sector.

Economy Minister Robert Habeck announced the decision on Wednesday, but declined to name the affected company. However, a person familiar with the matter said it was technology group ERS Electronic, based in Bavaria, which was to be acquired by a Chinese investor.

ERS makes heat seals that are used to hold semiconductor the wafers are in place while they are being inspected. The decision to block the deal was first reported by Handelsblatt.

The government also confirmed it had stopped the sale of the Elmos semiconductor plant in Dortmund to China’s Silex Microsystems.

The moves underscore the government’s growing concerns about Western chip technology and the security of supply chains. In October, the U.S. imposed sweeping controls on exports of high-end chips aimed at making it harder for China to produce advanced semiconductors.

The economy ministry said in a statement that the acquisition of Elmos would “endanger public order and security in Germany”.

The decisions on Elmos and ERS came days after German Chancellor Olaf Scholz made his first official visit to China, the first by a Western leader since the start of the coronavirus pandemic.

Scholz sparked controversy on the eve of the trip by criticizing the advice of six ministries and his intelligence agencies over the sale of shares in a container terminal at the port of Hamburg to Chinese shipping company Cosco.

The Greens, part of Scholz’s government coalition, protested against that decision. Green members of the government, particularly Habeck and Foreign Minister Annalena Baerbock, are more skeptical of Chinese investment than the Social Democrat Scholz, although he has also spoken of the need for German businesses to diversify into markets other than China. .

Habeck said that in the semiconductor industry, “it is important for us to protect the technological and economic sovereignty of Germany and Europe.” “Germany is of course open and remains open to investment, but we are not naïve either,” he continued.

Speaking to reporters later, Habeck said China was pursuing a “deliberate strategy” of “trying to gain knowledge” of manufacturing processes in the semiconductor and microchip industries in order to “influence” the industry. “That is why it is necessary to consider the whole picture,” he added.

He said that Germany should start subjecting domestic investments to more careful scrutiny. “The times when you can bend a little and say that economic policy is best when it is non-political, and the best minister is the one who does nothing. they are over,” he said.

Investment screening by his ministry is now “embedded in a geopolitical context that is highly politicized,” he said.

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