By Ed Frankl and Andrea Thomas


The German government on Wednesday halted the takeover of two chip manufacturers by Chinese investors on security concerns, its economy ministry said Wednesday.

Berlin halted the takeover of Elmos Semiconductor SE by Swedish rival Silex, a subsidiary of Chinese company Sai Microelectronics Inc., the ministry said in a statement.

Mr. Habeck didn't name the second company. However, business daily Handelsblatt reported earlier Wednesday that a takeover of Bavaria-based company ERS Electronic by a Chinese investor had been blocked.

"We have to take a close look at company takeovers when important infrastructure is involved, or when there is a risk that technology will flow to buyers from non-European Union countries," Economics Minister Robert Habeck said in a statement.

"In the semiconductor sector in particular, it is important to us to protect the technological and economic sovereignty of Germany and Europe," he added.

However, Mr. Habeck said that China should remain a trading partner, though Germany must see when trade is used against the interests of the country.

Dortmund-based Elmos said late Monday that its around EUR85 million ($85.6 million) planned takeover probably wouldn't be approved after being consulted by the German cabinet.

Germany has been looking to loosen some economic ties with China in an effort to reduce the outflow of technology and protect its infrastructure amid growing security concerns.

When Chinese firm Midea Group took control of Kuka AG in 2016, it prompted debate at the top of German politics over the role of China in the country's economy.

The government is reviewing 17 proposed Chinese investments in German companies and their impact on national-security interests, the economy ministry said.


Write to Ed Frankl at edward.frankl@dowjones.com and Andrea Thomas at andrea.thomas@wsj.com


(END) Dow Jones Newswires

11-09-22 0815ET