Belgium (Brussels Morning Newspaper) The German Economy Ministry has reportedly decided to halt the proposed Chinese takeover of a German chip factory, reversing its original opinion just days after German Chancellor Olaf Scholz met with Chinese President Xi Jinping in Beijing.
The Ministry had previously greenlit the sale of Elmo’s chip manufacturer to its Swedish competitor Silex, which is a subsidiary of the Chinese Sai Microelectronics group. This move received heavy criticism behind closed doors in the European Union, with many critics warning that Berlin seems to be ignoring the dangers of developing a one-sided dependency on China.
Ahead of Scholz’s visit to Beijing last week, Germany had already approved the sale of a 25-percent stake in the port of Hamburg to Chinese Cosco, deciding only at the last minute not to allow a higher stake which would give the Chinese state-owned shipping giant a blocking state in Germany’s largest port.
Scholz also invited several German industry leaders to accompany him on the trip, such as BASF head Martin Brüdermuller, Volkswagen CEO Oliver Blume, and Siemens head Roland Busch, all of whom are looking to expand their companies’ businesses in China. With Scholz apparently treating the visit as a business diplomacy visit, the news of Silex being allowed to take over Elmos raised red flags in the EU.
The European Commission warned the member states against becoming dependent on single outside suppliers of critical materials and components, with Bruxelles aiming to boost the Union’s chipmaking capabilities, in order to prevent future supply disruptions and bottlenecks such as the global semiconductor shortage which bore heavily on Europe’s carmaking industry.
With the Russian invasion of Ukraine demonstrating the danger of allowing the members’ economies to become dependent on authoritarian suppliers for their key elements, the European Commission intensified the drive to diversify the Union’s energy supply and production.
High Representative Josep Borrell stressed last month that the EU used to depend on Russia for cheap energy and China for its market to fuel European prosperity, but that this world no longer exists. “The access to China is becoming more and more difficult,” said Borrell. “The adjustment will be tough, and this will create political problems.”
Svholz’s decision to sell off the Hamburg port stake, approve the takeover of a chip manufacturer, and take industry leaders with him to Beijing, while rebuffing French President Emmanuel Macron’s offer to travel together, created an appearance that Germany was seeking to take a separate stance towards Beijing from the rest of the EU.
The sudden reversal on the matter of Elmos comes as sources within the Economy Ministry are saying that the government is currently working on a China strategy that is more focused on “reducing one-sided dependencies”, as well as “protecting infrastructure and preventing technology leakage”.
