Fri, Nov 11, 2022 page10

• Berlin blocks Chinese firm’s chip plant deal

  NO ELMOS SALE: The government stopped two deals, including one involving a Sai Microelectronics subsidiary, as Germany seeks to ‘to protect critical production areas

  • AP, BERLIN
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  The German government on Wednesday blocked the sale of a semiconductor factory to a Swedish subsidiary of a Chinese company, a decision that comes as Berlin grapples with its future approach to Beijing.

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

  The government’s red light was anticipated after German company Elmos Semiconductor SE this week said that it had been informed the 85 million euros (US$84.5 million) sale of its chip factory in Dortmund to Silex Microsystems AB of Sweden would likely be prohibited.

  

  German Chancellor Olaf Scholz, second right, in Berlin on Wednesday presents a report on the country’s economic development with members of the German Council of Economic Experts.

  Photo: AFP

  Silex is owned by Sai Microelectronics Inc (賽微電子), German media reported.

  Although the deal, announced in December last year, was not significant financially and the technology involved apparently was not new, it raised concerns over the wisdom of putting German chip production capacity in Chinese hands.

  German Minister of Economy and Climate Protection Robert Habeck said the government also blocked a second planned investment by an investor from outside the EU, but he would not give details because it is still subject to the business confidentiality of the company involved.

  

  The headquarters of Elmos Semiconductor SE in Dortmund, Germany, is pictured on Tuesday.

  Photo: AFP

  In stopping the 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 US and other governments have tightened controls on access to chips and other technology.

  Elmos said it and Silex regretted the German government’s decision, and that the transfer of new technology from Sweden and investments at the Dortmund site “would have strengthened semiconductor production in Germany.”

  Elmos said it would analyze the decision “with regard to whether there is a material violation of the parties’ rights, and decide whether to take legal action.”

  Scholz’s nearly year-old administration has signaled a departure from former German chancellor Angela Merkel’s firmly trade-first approach to China.

  It plans to draw up what it calls a “comprehensive China strategy.”

  However, that is still pending, but German Minister of Foreign Affairs Annalena Baerbock and others have made clear that Germany wants to avoid repeating mistakes it made with Russia, which used to supply more than half of the country’s natural gas and now supplies none.

  However, a decision last month pointed to unresolved questions about the extent to which Chinese companies should be allowed to invest in Europe’s biggest economy.

  Officials argued over whether to allow China’s Cosco Shipping Holdings Ltd (中遠海運控股) to take a 35 percent stake in a container terminal at the Port of Hamburg.

  Members of two junior parties in the governing coalition opposed that deal, while Scholz, a former Hamburg mayor, downplayed its significance. Scholz’s Cabinet eventually cleared Cosco to take a stake below 25 percent. Above that level, an investor can block a company’s decisions.

  Scholz is encouraging companies to diversify, but not discouraging business with China.

  He said before his trip that “we don’t want decoupling from China,” but that “we will reduce one-sided dependencies in the spirit of smart diversification.”
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