US warns Berlin on China takeover of chipmaker: report

Frankfurt

US intelligence services warned Berlin that a now on-hold Chinese takeover of German semiconductor equipment maker Aixtron could give Beijing access to technology that could be used for military purposes, business daily Handelsblatt said.

The German economy ministry said on Monday that it had withdrawn its approval for Fujian Grand Chip Investment Fund (FGC) to buy the Aachen-based firm for 670 million euros (S$1 billion), citing previously unknown security-related information.

The ministry declined to comment further in light of the Handelsblatt report on Wednesday and said that it could give no details on the "origin or the nature" of the information that led to clearance being withdrawn.

A spokeswoman added the review would likely take between two and three months once the ministry had collected all relevant documentation.

Aixtron shares dropped 6.1 per cent to trade at a five-month low of 4.84 euros by 1234 GMT, well below the six euros per share that FGC had offered shareholders for their stock.

The newspaper, citing German intelligence sources, said that US authorities had shown representatives of German ministries evidence last Friday, at a meeting at the US embassy in Berlin, although they refused to hand it over.

Concern is growing in Berlin about losing key technology to China after a string of Chinese acquisitions of German companies including flagship robot maker Kuka.

Aixtron sells its equipment, which is used to deposit chemical layers on silicon wafers, mainly to LED (light-emitting diode) chipmakers. It is not designed for military purposes but analysts say it could be adapted, with some difficulty.

The US Committee on Foreign Investment in the United States (CFIUS), which reviews takeovers from a national security perspective, in January blocked a plan by Dutch company Philips to sell its Lumileds LED business to Chinese buyers. REUTERS