Investment control: Federal Cabinet prohibits sale of Elmos chip factory to Chinese investor | Fieldfisher
Skip to main content

Investment control: Federal Cabinet prohibits sale of Elmos chip factory to Chinese investor




The Federal Ministry of Economics and Climate Protection (BMWK) announced on 9 November 2022 that the chip factory of German chip manufacturer Elmos Semiconductor SE may not be sold to a Chinese investor who had tried to acquire it via a Swedish subsidiary.


Reasons for the decision

The German Cabinet prohibited the transaction on the grounds that the acquisition would have endangered Germany's public order and security. In particular, milder means than stopping the sale, such as approving the acquisition with conditions, had not been suitable to eliminate the identified dangers.

Germany is an attractive destination for foreign investors because of its innovative and technological strength, the BMWK said. However, there were also investments that could be harmful to the country's security, so the federal government had to ensure that such negative effects on public safety or order were avoided, the BMWK said.

In this regard, Federal Minister Dr. Robert Habeck explained that one must "look closely at company takeovers when it comes to important infrastructures or when there is a risk of technology flowing away to acquirers from non-EU countries. Particularly in the semiconductor sector, it is important for us to protect the technological and economic sovereignty of Germany and also Europe." However, he added, Germany remains an open investment location.

In the microchip manufacturing and semiconductor sectors in particular, China is taking a strategic approach, Habeck said. On the one hand, this is about "production domination," but also about "influence to gain knowledge."



This decision is in line with the view of the Federal Office for the Protection of the Constitution. The Federal Office for the Protection of the Constitution had warned that China was deliberately buying into certain industries in order to use them as political leverage.

This decision once again shows the increased relevance of investment control and reflects the position of the BMWK in previous proceedings.

For example, as recently as February of this year, the takeover of a German manufacturer producing important components for semiconductors by a Taiwanese group fell through because the German Federal Ministry of Economics and Climate Protection did not give its approval for the takeover in time.



Since the 17th amendment to the Foreign Trade and Payments Ordinance came into force in mid-2021, which includes further tightening of investment control in Germany and, in particular, significantly expands its scope, investment control has become considerably more important. Since the amendment, investment control procedures are no longer limited to military-related areas, but affect numerous investments in a wide range of sectors.

It is therefore to be expected that in future more applications will have to be made in the context of investment control proceedings and companies should carefully examine relevant aspects in the run-up to acquisitions.

If you have any questions regarding investment control, please do not hesitate to contact Raoul Schätzler or the Fieldfisher Team.



BMWK: Elmos chip factory cannot be sold to Chinese investor – cabinet blocks sale
Handelsblatt : Chip factory may not be sold (German version only) 


Areas of Expertise

Foreign Investment Control