Habeck’s Ministry of Economic Affairs lets deal burst

The actions of Habeck’s officials come as no surprise. The Handelsblatt and other media associated with the ministry had already learned in advance that the chances of the takeover were slim. Because Siltronic is not just any company.

The Munich-based company produces so-called wafers, silicon discs that act as the basic material for semiconductor chips. Globalwafers is number three on the world market. Together with the number four, Siltronic, the Taiwanese want to catch up with the Japanese industry leader Shin-Etsu.

>> Read here: Globalwafers boss is fighting for a billion-dollar takeover of Siltronic

Question of technological and economic sovereignty

When the companies announced the merger more than a year ago, it was only beginning to be clear how important the decision by the Ministry of Economic Affairs would be. Microchips are an elementary component for cars, computers and smartphones. However, production capacities are limited.

This has been particularly evident in the past few months: Due to problems in the international supply chains, triggered among other things by China’s rigid corona policy, chips are missing everywhere. As a result, German automobile manufacturers had to scale back their production significantly. There were bottlenecks for many electronic devices in Germany, among other places.

Microchips are increasingly becoming a commodity of paramount importance to the entire economy. The risk that they will also be misused as a means of exerting political pressure is all the greater. Berlin and Brussels are therefore in turmoil.

The question of whether to put the last German wafer manufacturer in Asian hands became a question of Germany’s and Europe’s technological and economic sovereignty.

Due to the scope of the potential deal, the Ministry of Economic Affairs had pushed through an extension of the deadline for its review. Observers consider Siltronic to be a blueprint for how Habeck wants to preserve economic sovereignty: It’s better to take a close look and use state power than to allow a deal that leads to lasting difficulties – and when in doubt, use state power.

Because even if the information had been provided earlier by the Chinese antitrust authorities, a positive signal from Berlin would have been unlikely.

In the last legislative period, the Ministry of Economic Affairs tightened the options for intervention in the case of foreign takeovers under the then Economics Minister Peter Altmaier (CDU) and expanded them to 17 areas of “high and future technology sectors”, including the semiconductor industry.

According to the Foreign Trade and Payments Ordinance, in order to prohibit a merger, there must be a “probable impairment of public order or security”. According to the ordinance, business and security policy needs to be weighed up in individual cases.

Brussels and Berlin want to massively promote the semiconductor sector

Habeck already demonstrated the importance of the microchip industry in December. As one of his first official acts, he had selected 32 company projects on microelectronics, which are to be massively funded as part of a European IPCEI project.

IPCEI stands for “Important Project of Common European Interest”. “We have to work together to cover our microelectronics needs ourselves and bring more production to Germany and Europe again. We will take billions in funding for this,” the minister said.

A sale of the last German wafer manufacturer to Asia would hardly be possible, according to those close to the ministry. “Funding the microchip industry on a large scale and then agreeing to sell such an important company wouldn’t really go together,” an insider said.

And Brussels recently underlined that. The EU Commission wants to support Europe’s chip industry with a two-digit billion amount and urge manufacturers in times of crisis to give preference to European customers, as was communicated last week.

The corresponding law, the “EU Chips Act”, is currently being voted on by the Commissioners. It is due to be presented on February 8th. The EU Chips Act is a turning point in European economic policy: the end of the reluctance to give state aid. The Commission wants to mobilize more than 30 billion euros.

In times of international tensions, the EU can no longer rely on a “global division of labor” in which Europe leaves the “market of the future” to Asia, stressed EU Internal Market Commissioner Thierry Breton. After all, the continent’s “industrial might” depends on chips.

No further offer for Siltronic

The Economics Ministry in Berlin could not even be convinced by the concessions that Siltronic and Globalwafers wanted to make. In an agreement, the companies agreed on a guarantee for the German Siltronic sites and protection against redundancies until the end of 2024.

In the short term, however, the actions of the Ministry of Economics could intensify the problems in the semiconductor sector in Germany. Globalwafers boss Doris Hsu threatened a few days ago in the Handelsblatt that if approval were not granted, Globalwafers would increasingly serve customers in Europe from overseas. Less money would then flow to Europe. “If the deal fails, we’re more likely to invest in America than in Europe.”

The company did not want to give the ministry any more time. After the deadline has now expired, Globalwafers could have made a new takeover offer to the Siltronic shareholders. However, the company from Taiwan rules this out.

Meanwhile, investors had already expected the deal to fail. Siltronic shares were listed at around 116 euros on Monday. That’s almost 30 euros less than Globalwafers wanted to pay per share.

The biggest loser for now is Wacker Chemie. The major Siltronic shareholder has wanted to part with his shares for years and now has to look for a new buyer for the block of shares. Munich would have collected 1.2 million euros if Globalwafers had come into play.

More: Billions for chips: How the EU wants to bring modern semiconductor factories to Europe