German economy ministry favours blocking Chinese takeover of Elmos' chip production - sources (updated)

Elmos Semiconductor SE

08/11/2022 10:18

(Adds background)
       BERLIN, Nov 8 (Reuters) - Germany's economy ministry has
recommended to the cabinet that the government block the Chinese
takeover of Elmos'  ELGG.DE  chip factory, saying it would pose
a threat to national security, ministry sources said on Tuesday.
    Milder measures, such as an injunction, are not suitable for
addressing the identified dangers, added the sources.
    Elmos said on Monday that the German government would likely
block the sale to competitor Silex, a Swedish company that is a
subsidiary of Chinese group Sai Microelectronics  300456.SZ .
    The sources said the economy ministry and the government are
currently working on a China strategy focused on reducing
one-sided dependencies and encouraging diversification, as well
as protecting infrastructure and preventing technology leakage. 
    German Chancellor Olaf Scholz said during a trip to Beijing
last week that it was clear that China and Germany were no
friends of "decoupling", while also complaining about increased
difficulties for German companies accessing the Chinese market. 
        Concerns about the extent of Chinese influence in German
businesses came to the forefront last month after Scholz pushed
through a decision to allow Chinese shipping giant Cosco
 COSCO.UL  to buy a stake in a terminal in the country's largest
port, triggering unprecedented protest from within his own
governing coalition. 
        In that case, the cabinet approved a 24.9% stake
investment by Cosco, less than an initially planned 35% stake,
and it does not give Cosco any say in management or strategic
decisions.
  
        The decision sparked an angry response by the foreign
ministry, which warned that the investment disproportionately
expands China's strategic influence and, in the event of a
crisis, would open up the possibility for China to politically
instrumentalise part of Germany's critical infrastructure.
  
 (Reporting by Markus Wacket, Writing by Miranda Murray
Editing by Paul Carrel and Louise Heavens)
 ((Miranda.Murray@thomsonreuters.com;))