Elmos considers legal action over German fab sale ban

Elmos considers legal action over German fab sale ban

Business news |
By Peter Clarke

Automotive chip company Elmos has said that the German government’s decision to ban the sale of its Dortmund wafer fab to MEMS maker Silex Microsystems was announced without following the proper procedure.

In a statement Elmos Semionductor SE (Dortmund, Germany) said the announcement was made “without granting Silex and Elmos the required hearing.” The statement added: “Elmos will carefully analyze the decision received, also with regard to whether there is a material violation of the parties’ rights, and decide whether to take legal action.”


The ban had been expected after the German government tipped Elmos of a change of heart over the sale of a mature wafer fab in Dortmund to Silex Microsystems AB (Järfälla, Sweden) (see German government flip-flops on Elmos fab sale – ban now likely). Silex is the world’s leading pure-play MEMS foundry and a wholly-owned subsidiary of Sai MicroElectronics Inc. (Beijing, China), sometimes called CellWise.

It was also revealed that Elmos had been through a review process with the Federal Ministry for Economic Affairs and Climate Action and it had been indicated to Elmos and Silex that approval was possible, subject to certain conditions. A revised draft along the required lines had been submitted, Elmos said.

Elmos added that Silex would have made significant investment in the Dortmund location, introduced MEMS manufacturing from Sweden, and strengthened semiconductor manufacturing in Germany.

The sale to Silex for a net purchase price of around €85 million was agreed back in December 2021 subject to regulatory approvals. Silex filed the planned transaction with the Federal Ministry for Economic Affairs and Climate Action in January 2022 and the two companies have been working with the ministry since then, Elmos said. For Elmos the sale was a key part of transition to a fabless strategy and it was expected to close in 2H22. However, as the year has progressed the political tension between the US and China has continued to increase.

It is reported that defence and security agencies within German were opposed to the sale and brought pressure to bear on the Federal Economic Ministry.

SMEI hurt by krona

Sai MicroElectronics Inc. (SMEI) shares have lost 9.8 percent since the announcement that the sale was blocked.

Silex Microsystems’ MEMS production line generates 90 percent of SMEI’s MEMS revenue, which in turn accounts for over 90 percent of the total revenue. The Beijing production line makes the remaining 10 percent. A devaluation of the Swedish krona versus the Chinese yuan of 11 percent this year has hurt sales and profits reported by SMEI.

Meanwhile a similar deal under which Nexperia BV a Dutch semiconductor company with a Chinese owner has acquired Newport Wafer Fab Ltd. (Newport, Wales) continues to be under investigation by the UK government.

In the case of Newport Wafer Fab the deal was allowed to go through but was then started to be investigated almost a year after completion. The UK government is said to be considering reversing the deal or putting limitations on Nexperia. A decision was due by October 3 but has yet to arrive, possibly due to turmoil in UK government leadership.

Related links and articles:

News articles:

Report: Germany to okay sale of wafer fab to China despite opposition

China’s Silex Microsystems remains top MEMS foundry

China buys Swedish MEMS foundry, builds fab

Elmos sells California subsidiary to maintain automotive focus

Opinion: Is the West still blind to China’s ‘buy-the-tech’ strategy?

Let us stay under China control, Newport workers plead

UK set to tell Nexperia to sell wafer fab stake – report

Newport Wafer Fab sale decision delayed, as private equity circles

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