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BEIJING, November 10 (TMTPOST) — Chinese chip company Sai MicroElectronics Inc (SMEI) announced on Thursdasy that it had received a formal document from the German Ministry for Economic Affairs and Climate Action on Wednesday evening, prohibiting its Swedish subsidiary from acquiring German company Elmos Semiconductor SE's auto chip production line.

The German government rejected the acquisition on the grounds of the protection of technology and economic sovereignty.

SMEI said that the acquisition transaction, which was nearing completion, will not be able to proceed because of the rejection and that the parties to the transaction will analyze the German government's decision document in detail and decide on further actions.

"The company deeply regrets this final decision by the German authorities," SMEI said. The company primarily engages in designing and manufacturing MEMS chips.

The German government's change of attitude is unexpected. It occurred after German Chancellor Olaf Scholz's visit to China last Friday, which was the first Western leader's trip to China since the outbreak of the pandemic and came after the 20th National Congress of the Communist Party of China. The trip was controversial in Germany and Scholz's insistence on visiting China with more than a dozen German business leaders was seen as conducive to consolidating the economic fundamentals of the Sino-German cooperation.

On October 26, with Scholz's support, Germany's Hamburg Port and Logistics AG announced that the German government had conditionally approved the acquisition of less than a 25 percent minority stake in the Container Terminal Tollerort in the Port of Hamburg by the central enterprise China COSCO Shipping Group.

Similar to the Port of Hamburg transaction, this acquisition by SMEI has been under review by the German government for nearly one year. On December 14, 2021, Silex, a wholly owned subsidiary of SMEI, announced that it had signed an agreement with Elmos to acquire Elmos' automotive chip manufacturing line in Dortmund for 84.5 million euros (approximately $85.97 million). It submitted application documents for regulatory approval in January.

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