The US-China Chip War Has Reached Europe 

Two European chip companies have encountered issues. Because of their ties to China. This signifies that the West is becoming increasingly concerned about possible Chinese control over the crucial infrastructure.

Just days after Germany blocked the sale of another chip factory. The brand-new owner of Britain’s largest chipmaker gave the order to reverse its takeover. Both transactions—which involved the acquisitions of Chinese-owned companies—were hampered by concerns about national security.

In the UK, more than a year after assuming control of the production facility. The federal government ordered Nexperia. A Dutch subsidiary of Shanghai-listed semiconductor manufacturer Wingtech. To sell a minimum of 86% of its stock in Newport Wafer Fab. Since then, employees have been protesting the decision, claiming that almost 600 jobs are in jeopardy.

In Germany, the financial ministry forbade Elmos Semiconductor, a manufacturer of automotive chips, from selling its manufacturing facility in Dortmund to Silex, a Swedish affiliate of Sai Microelectronics, a Chinese company.

Tensions between the US and China were already rising due to chip manufacturing. Now, the two troubled deals show. How the pressure is also increasing in Europe. Mainly as Western officials are under pressure to keep critical sectors under the control of others.

Xiaomeng Lu, director of geo expertise at Eurasia Group, said that These decisions “mark a shift toward tougher attitudes toward Chinese investment in Europe’s most important industries.” according to the findings.


“There is no doubt that US pressure affected these choices. These actions were probably motivated by [a] growing sense of technology sovereignty, as governments worldwide increasingly [view] the semiconductors industry as a strategic resource and work to prevent foreign takeovers.

Legal experts noted that the two decisions were noteworthy because each deal was initially believed to approve.

Ian Giles, director of a Norton Rose rivalry and antitrust in Europe, the Middle East, and Asia, says. The UK’s National Security and Investment (NSI) act, which went into effect in January, calls the Newport Wafer case “the first completed acquisition” that should be reversed.

Last week, Nexperia expressed shock at the decision, stating that “the UK government chose not to engage Nexperia in a meaningful dialogue or even visit the Newport site.”

The company continued by saying that it had agreed to stay clear of “activities of potential concern” and to give the UK government direct control and involvement in managing Newport, a 28-acre site in south Wales.

The production facility creates silicon wafers, the basis for laptop chips. Many of its products eventually become medical equipment and energy vehicles. According to Nexperia, the future of the facility’s employees is uncertain at this time.

The Nexperia Newport Staff Association expressed its “disbelief” that workers’ livelihoods had been “in danger in the lead-up to Christmas” last Thursday in an open letter to the UK government.

In a statement, the group rejected the notion that the agreement would jeopardize British safety and stated, “This is a deeply political decision.” “You must use common sense and keep Nexperia’s Newport factory open to protect our jobs.”

Elmos said in a statement following the injunction that German authorities had initially suggested they might grant conditional approval. They even shared a draft approval after a rigorous evaluation process lasting about ten months.

Government intervention is also necessary, according to Elmos’ technology is reportedly quite dated, according to Tim Schaper, Norton Rose’s head of antitrust and competition for Germany. State-of-the-art in the 1990s, and allegedly not of great industrial importance.”

He stated, “The transaction sparked a public discussion about” Chinese investors buying stakes in necessary German technologies.”
According to Alexander Rinne, head of the European antitrust practice at global law firm Milbank, based in Munich, regulators may have been concerned about a flow of technical knowledge.

In an interview, he said Elmos is a renown company for producing chips for the automotive industry, which is Germany’s cornerstone and national pride.

Both Elmos and Nexperia declined requests for interviews. Tuesday, a spokesperson for Nexperia told CNN Business that the company was “considering its options regarding the decision of the UK government.”

A growing source of tension between China and the United States is chipped. Washington has identified a supply shortage as a national security issue and emphasized maintaining competitiveness in advanced technological capabilities.

According to Lu, the US increased its restrictions this year while pressuring allies to enact their own. The US government ordered two leading chip manufacturers, Nvidia, in August.

AMD and (NVDA)

(AMD) to halt the export to China of specific high-performance chips.

Two months later, the Biden administration unveiled extensive export controls that prohibited Chinese companies from acquiring. Without a license, advanced chips, and chip-making machinery, the guidelines limited the ability of Americans or holders of US green cards to contribute to creating or producing chips at specific Chinese manufacturing facilities.

The pressure is increasing. Jens Stoltenberg, secretary general of NATO, urged the West on Monday to “take care not to create new dependencies” on China. At a NATO parliamentary meeting in Madrid, Stoltenberg stated that he witnessed “growing Chinese efforts” to manage critical industrial sectors, supply chains, and essential infrastructure in the West.

He said, “We cannot give authoritarian regimes any opportunity to take advantage of our weaknesses and undermine us.

Regarding handling the two European semiconductor cases, China has pulled back.

When asked about the Newport Wafer order last Friday, Chinese Foreign Ministry Spokesperson Mao Ning responded. “We vehemently call on the UK to respect the interests and legal rights of Chinese businesses, oppose the UK’s action, and provide a fair, just, and transparent, nondiscriminatory business environment,” the statement reads.”The UK has abused state power and stretched the idea of national security.”

At a press conference earlier this month, Zhao Lijian, another spokesperson for the Chinese Foreign Ministry, urged “Refrain from politicizing normal economic and trade cooperation,” said Germany and other countries. Without explicitly mentioning Elmos.

In the past year, Germany has demonstrated increased scrutiny of Chinese consumers. A similar controversy erupted last month over a Cosco offer to acquire stock in a Hamburg port terminal operator. Cosco is a major Chinese state delivery company. Later, the funding’s scope constrains due to pressure from some federal officials.

According to lawyers, if the chipmakers succeed, they may have to fight an uncertain battle for years.

Unless there are exceptional circumstances, they would need to file a lawsuit in court within about a month of the regulators’ decisions in each case.

Britain and Germany recently added regulations that strengthen government oversight of such decisions, making outcomes more difficult to predict. The federal government in Germany can step in. In the event of a “potential impairment of public safety and order” to intervene in potential offers. According to Schaper, as a result of changes to international direct funding regulations that took effect in 2020.

Previously, however, he told CNN Business that it could only impose restrictions. “if there were a genuine, significant threat to public order and security.

According to Andrea Hamilton, a Milbank associate base in London. In the UK, the federal government’s ability to evaluate offers made in response to the NSI Act in the past is “considered surprising and far-reaching.”

It will also be a test case for the limits of the NSI Act if Nexperia’s plan goes through.

The Netherlands is now being taken into account elsewhere. The Dutch government is currently dealing with pressure from the US to limit exports to China, mainly from ASML.

(ASML), a manufacturer of semiconductor gear that dominates the market for lithography machines, according to Lu at Eurasia Group.

It will be the subject of the upcoming case study. We are starting to CNN Business.

The Netherlands has made it clear that it will create its own space.

Liesje Schreinemacher, the Dutch Minister for Foreign Trade. Responded to a question. About the issue this month by saying, “Do not copy exactly the US export controls for China,” said the nation.–AqH-9LBI

In an interview, she told the Dutch newspaper NRC that “we make our own assessment.”

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