The German government on November 9 vetoed the sale of two local semiconductor producers to Chinese investors over national security concerns. However, economy Minister Robert Habeck reiterates that Germany is not naive.

Elmos Semiconductor, which produces automobile chips, was selling its factory in Dortmund to Silex, a subsidiary of China’s Sai Microelectronics in Sweden.

But, per a ministry statement cited by CNN, Berlin finds that the acquisition would have endangered Germany’s public order and safety.

Reuters reported that Berlin has also prohibited investment in the Bavarian state-based company ERS Electronic according to government sources. A firm representative said it has been looking into the possibility of receiving financing from a Chinese private equity firm. However, the person insisted that ERS Electronic had yet to make a plan to sell the company.

Speaking about the blockage on November 9, Economy Minister Robert Habeck stated, “We have to look at company takeovers closely when it comes to important infrastructure or when there is a danger that technology flows to buyers from non-EU countries.”

He added that Germany’s and Europe’s technological and economic sovereignty must be protected, especially in the semiconductor industry.

He said, “Of course, Germany is and will remain an open investment location, but we are not naive either.”
Berlin stepped in last month when COSCO, a major Chinese shipping company, announced intentions to acquire a 35% stake in the company that runs a port facility in Hamburg. The German cabinet later gave the nod to a 24.9% stake investment, which still sparked controversy.

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