Germany blocks Chinese investment in two chipmakers after security concerns: sources (updated)

Elmos Semiconductor SE

09/11/2022 09:44

(Recasts, adds details, background)
    By Andreas Rinke and Christina Amann
       BERLIN, Nov 9 (Reuters) - The German government on
Wednesday decided to block prospective Chinese investment in two
domestic semiconductor producers, sources told Reuters, after
the moves raised national security concerns.
    The economy ministry had 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.
    Berlin blocked the sale to Silex, a Swedish company that is
a subsidiary of Chinese group Sai Microelectronics  300456.SZ .
    The government on Wednesday also decided to block a Chinese
takeover of ERS Electronic, which is based in the southern state
of Bavaria. ERS declined immediate comment and it was not
immediately clear which Chinese company wanted to buy the firm. 
    "The cabinet has decided on the two bans under the Foreign
Trade Act," one of the sources said. 
    The decisions come at a time of heightened sensitivity
around relations between Berlin and Beijing.
    The government of Chancellor Olaf Scholz, who visited China
last week, is trying to balance a push for more access to the
Chinese market for European companies while addressing security
concerns and moving away from Germany's economic reliance on
China.
    Scholz has pushed through a decision to allow China to buy a
minority stake in a terminal in Germany's largest port despite
opposition from within his coalition. 
    That decision had sparked an angry response by the foreign
ministry, which warned that the investment disproportionately
expanded China's strategic influence. China has previously
dismissed such concerns. 
    Scholz has warned of any decoupling from China or
de-globalisation in general, while also emphasizing the need for
Germany to diversify its Asia trade and take strategic concerns
more into account in its business dealings.
 (Reporting by Andreas Rinke and Christina Amann; writing by
Matthias Williams
Editing by Madeline Chambers and Tomasz Janowski)
 ((matthias.williams@thomsonreuters.com;))