Berlin, Munich The federal government still wants to stop the sale of the Dortmund company Elmos’ chip factory to a Chinese investor. Federal Minister of Economics Robert Habeck (Greens) has proposed to the rest of the federal government to ban the deal, according to ministry circles on Tuesday. “This acquisition would constitute a threat to public order and security in Germany,” it said.
On Monday evening, Elmos itself announced in an ad hoc announcement that the ministry had informed the company that the ban was to be decided in the cabinet this Wednesday. The Handelsblatt had previously reported on the plan.
In order to stop the sale, however, Habeck needs the support of the other departments. In the case of the entry of the Chinese state shipping company Cosco at a container terminal in the port of Hamburg, Chancellor Olaf Scholz (SPD) had denied him this.
At Elmos it is now said that the chancellery is also critical of the sale of the chip factory. It is believed that Chinese influence on chip production would have a different meaning than a stake in a port terminal operator. SPD party leader Lars Klingbeil also recently explained in an interview with the Handelsblatt that he sees the chip factory deal “much more critically than Cosco’s entry”.
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The buyer of the plant in Dortmund would have been the Swedish competitor Silex. The company is wholly owned by the Chinese group Sai Microelectronics. With the sale, Elmos would give up its chip production.
Government officials had long advocated approval
The week before last, the Handelsblatt reported that the federal government was planning to probably allow the sale to Silex. Even from circles in the China-critical Ministry of Economic Affairs, it was said that the takeover would not be a problem. The transaction worth 85 million euros does not play a major role, Elmos’ technology is outdated, the case can be clarified at the working level.
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But in the meantime Minister Habeck has dealt with the case himself and has spoken out against the takeover. According to ministry circles, the Economics Ministry and Habeck are critical of deals in the field of semiconductors and chips.
With his assessment, the Economics Minister agrees with the views of the constitutional protection officers. The Federal Office for the Protection of the Constitution had already sounded the alarm before the takeover, when the federal government was still tending towards approval. Security officials warned that China is targeting certain industries to use as a political bargaining chip
Elmos was surprised at the government’s about-face that had now been completed. The ad hoc announcement states: “This is a new development, since to this day the BMWK [Bundesministerium für Wirtschaft und Klimaschutz, Anm. d. Red.] notified the parties involved that the transaction was likely to be approved.”
Warning from the Office for the Protection of the Constitution
According to Habeck and his ministry, less stringent measures than stopping sales, such as orders regarding supply contracts or site maintenance, are not an option at Elmos. Government circles said that despite the small volume, Habeck wanted to see the takeover as part of China’s overall strategy.
The President of the Thuringian Office for the Protection of the Constitution, Stephan Kramer, also warns of the Chinese approach. The technology from Elmos doesn’t seem to be anything special anymore. “But if the production of such chips is placed in Chinese hands, the high economic dependency on China and Germany’s vulnerability will continue to grow,” Kramer told the Handelsblatt.
The chairman of the secret service control committee of the Bundestag, Konstantin von Notz (Greens), had warned: “Anyone who sells such know-how to a country like China in these times is powdered with the staple bag.”
The German automotive industry in particular is heavily dependent on semiconductors, which are indispensable for every modern vehicle.
(Photo: Hulton Archive/Getty Images)
As a result of the foreseeable about-face by the federal government, the Elmos share fell by 13 percent on Tuesday. Officially, the company wanted to comment just as little as the chancellery.
From industry circles it was said that there was no alternative buyer so far. The several hundred jobs in Dortmund are endangered in the long term if there is no other takeover offer. In the short term, however, Elmos still needs its own semiconductor production, so that job cuts are not imminent.
Nevertheless, there is further potential for conflict with the China strategy
If the Chancellery agrees to the ban, as expected, this should ease the tension in the internal government conflict over the right China strategy. In addition to the posse about Cosco’s entry into Hamburg, Chancellor Scholz’s trip to China last week caused displeasure.
But the next possible lines of conflict are already waiting. Further investment reviews with Chinese holdings are expected to be completed in the coming months. In the current year there are 261 such checks on foreign direct investments, 35 times the buyer comes from China. 17 of these Chinese investments are currently still being appraised. The ventilator manufacturer Heyer Medical had already been banned in April.
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In addition, Habeck plans to fundamentally change foreign trade policy as part of the development of a China strategy by the federal government. “A particularly close look is necessary, for example, if infrastructure is affected or if there is a risk of a technology drain,” according to ministry circles.
The officials are already working on a reform of the investment tests. The state must ensure that negative effects of foreign investments are avoided. The parliamentary groups of the FDP and the Greens have already made concrete reform proposals, which, however, were evaluated cautiously in the SPD.
Minister of Economics Habeck does not want to leave it at the investment reviews. He also wants to readjust the federal government’s investment and export guarantees in order to prevent further dependencies. As reported by the Handelsblatt in August, there are also reservations within the federal government on this point.
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