Germany blocks Chinese-owned firm’s chip factory deal

BERLIN, Nov 12, (AP): The German government on Wednesday blocked the sale of a chip factory to a Swedish subsidiary of a Chinese company, a decision that comes as Berlin grapples with its future approach to Beijing.

The move by the Cabinet follows a recent compromise over a Chinese shipping firm’s investment in a German container terminal and a visit to Beijing last week by Chancellor Olaf Scholz.

The government’s red light was anticipated after German company Elmos said this week that it had been informed the 85 million-euro (dollar) sale of its chip factory in Dortmund to Silex Microsystems AB of Sweden

would likely be prohibited. Silex is owned by Sai Microelectronics of China, according to German media.

Although the deal announced in December wasn’t very significant financially and the technology involved apparently wasn’t new, it raised concerns over the wisdom of putting German IT production capacity in Chinese hands.

German Economy Minister Robert Habeck said the government also blocked a second planned investment by an investor from outside the European Union, but he wouldn’t give details because it is still subject to the business confidentiality of the company involved.

In stopping both deals, Habeck said security in Germany must be protected and “there is a particular need to protect critical production areas.”

“What is important is the political message that we are an open market economy, that foreign investments - including from countries outside the (European) Union - are wanted and welcome here, but an open market economy is not a naive market economy,” he told reporters.

Western governments are increasingly wary about China’s technology ambitions and assertive foreign policy. The United States and other governments have tightened controls on access to processor chips and other technology.