Germany is in talks to limit the export of chemicals to China that are used to manufacture semiconductors as Berlin steps up efforts to reduce its economic exposure to the Asian nation.
The proposal is part of a package of measures that German Chancellor Olaf Scholz’s government is discussing that would cut off China’s access to goods and services needed for the production of advanced semiconductors, people familiar with the matter said.
If implemented, such a step would limit German companies such as Merck KGaA and BASF SE from selling some of their semiconductor chemicals to China, said the people, who asked not to be identified because the discussions are private.
Photo: EPA
Scholz and German Minister of Economic Affairs Robert Habeck are liaising closely on the matter with European allies and the US, which is pushing for a global blockade of China’s access to key technologies, including semiconductors.
Officials in Berlin said there was no pressure from Washington on the matter, but rather a strong desire to work together and to close ranks on China.
Talks within the ruling coalition on such export controls are still at an early stage and officials are aware that any such decision could damage business ties with China, which has become Germany’s largest trading partner, the people said.
Habeck, who is also German vice chancellor, has advised officials in his department to work on a toolbox of measures to improve Germany’s economic resilience in some areas and reduce one-sided dependencies on China.
The idea of imposing export controls on chip chemicals is part of these deliberations, the people said.
The quickest and most practical way to implement such export controls would be to put the respective goods and services on Germany’s national dual-use list, one of the people said, adding that other approaches via international lists and treaties would probably take too long.
Export controls restrict trade in goods that can be used in civilian and military contexts.
The aim of such dual-use lists is to prevent the development and proliferation of chemical, biological and nuclear weapons, as well as the hidden production of conventional military weapons.
Earlier this month, German Minister of Foreign Affairs Annalena Baerbock traded barbs with Chinese Minister of Foreign Affairs Qin Gang (秦剛) during a visit to Beijing, saying that Taiwan’s destabilization would be a “horror scenario.”
Baerbock and Habeck are helping Scholz to shape a new security strategy that is meant to reduce reliance on China and shield critical infrastructure from hybrid attacks.
The Netherlands last month agreed to join the US effort to limit exports of chip technology to China.
The new measures rein in exports of ASML Holding NV’s immersion deep ultraviolet lithography products, adding to restrictions that already exist for the most cutting-edge lithography machines, which are critical to producing the world’s most advanced chips.
The rules are expected to be published before the summer.
While Germany does not have advanced chipmaking technologies, Merck Group and BASF SE provide firms around the world with critical chemicals required to make semiconductors.
Merck’s products or services are found in almost every single chip in the world, while BASF is a market leader in Europe and Asia, home to the world’s most important contract chipmakers including Taiwan Semiconductor Manufacturing Co (台積電).
Without supplies from Merck and BASF, China could face more challenges in developing advanced chip technologies and even its capabilities to make semiconductors could be affected.
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