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

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

Business news |
By Peter Clarke

Germany is set to approve the sale by Elmos Semiconductor SE of a wafer fab in Dortmund to China-owned Silex Microsystems, according to German business daily newspaper Handelsblatt, referencing government sources.

This is despite the opposition of the German intelligence agency and several other agencies, according to the report.

The deal has strong similarities to the takeover of Newport Wafer Fab Ltd. (Newport, Wales) by Nexperia NV, a Dutch company with a Chinese owner (see Let us stay under China control, Newport workers plead).

Automotive chip company Elmos is undergoing a transfer to becoming a fabless chip company that uses foundries. In December 2021 Elmos announced that it had a deal to sell its wafer fab to Silex Microsystems AB (Järfälla, Sweden) for a net purchase price of around €85 million. Silex had previously been acquired by Chinese interests in 2015 and is now owned by Sai MicroElectronics Inc.(SMEI), sometimes called CellWise.

Back in December Elmos said the transaction was expected to close in 2H22 subject to customary closing conditions and regulatory approvals. The deal could be approved within a few weeks or less, Handelsblatt said. German Chancellor Olaf Scholz is due to visit Beijing on November 4.

Sai what?

The report said the German government understands that Elmos’ wafer fab in Dortmund is old and that no valuable intellectual property will be transferred to China. However, it added that the German intelligence services have argued that China is pursuing a systematic expansion of chip production capacity and knowledge (see Opinion: Is the West still blind to China’s ‘buy-the-tech’ strategy?).

Under the proposed deal Silex would enter into a long-term agreement to supply Elmos with wafers up until at least 2027. This is standard practice for such wafer fab buy-out agreements. What is less usual is that Elmos would continue to own the building but provide the cleanroom to Silex on a long-term lease. Elmos will also provide the infrastructure, utilities, IT-support and licenses to Silex based on separate lease and service agreements. The testing of ICs will remain with Elmos.

Newport Wafer Fab is already owned by Nexperia but more than a year after that deal was done the UK government is considering reversing the deal or putting limitations on Nexperia. A decision was due but October 3 but has yet to arrive, while the UK government leadership has been in political turmoil.

Related links and articles:

News articles:

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

Technology fund formed for Newport Wafer Fab rescue bid

Newport Wafer Fab sale comes under investigation

Analyst Penn casts blame on Nexperia as Newport takeover investigated

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