The agency responsible appears to be reversing its previous stance on the transaction.

The German government will most likely block the sale of Elmos’ chip factory to a Chinese competitor, the company said this week. Elmos develops, produces and markets semiconductors, primarily for use in the automotive industry.

Elmos’ most recent update on the transaction is loud and clear. “The Federal Ministry of Economics and Climate Protection (BMWK) today has informed the parties involved that the sale of the Elmos wafer fab to Silex Microsystems will most likely be prohibited in the upcoming cabinet session on November 9, 2022”, the company said.

Although Silex is based in Sweden, the company is owned by Sai Microelectronics, a Chinese organization. Elmos went on to observe that “this a new development, as until today, the BMWK had indicated to the parties that the transaction most likely will be approved“.

Campaign against China

The German authorities may decide to block the deal given the recent tensions between China and western powers. Furthermore, the government is possibly acting in unison with the United States, whose campaign against the Chinese chip industry has intensified as of late. Last year, the EU and the US signed an agreement to support each other on Chinese trade policies.