U.S. intelligences services were behind a sudden decision by the German government to block a Chinese investor from acquiring Aixtron, according to Handelsblatt sources in the German intelligence community.
During a meeting at the U.S. embassy in Berlin, U.S. intelligence presented German government representatives with evidence that Aixtron manufacturing technology also has military applications. Washington is concerned that Beijing might use Aixtron equipment to produce electronic chips for its nuclear program.
Founded in 1983, Aixtron makes equipment used to produce complex semiconductors and nanotubes and nanofibers, tiny chip elements that can be also be used in military applications and sophisticated weapons system. The firm, based in Herzogenrath, a town near Aachen in northwest Germany, sells most of its equipment to Asian buyers.
Representatives from Chancellor Angela Merkel’s office, the Economics Ministry, the Interior Ministry and the Defense Ministry were all present at the meeting at the U.S. embassy, according to German intelligence sources.
Based on the information presented by U.S. intelligence, the German government reversed its decision to certify the proposed acquisition of Aixtron by the Chinese investor, Fujian Grand Chip Investment.
“The federal government received previously unknown information that the Economics Ministry reviewed with other ministries,” a spokeswoman for the Economics Ministry told Handelsblatt. “This action was jointly approved in the federal government.”
Ms. Merkel’s office declined to comment. An Aixtron spokesman said the company was reviewing the situation and had yet to be contacted by the Economics Ministry.
The intervention seems to mark the first time Aixtron has been challenged over the application of its products. Over the past 30 years, authorities have not raised any objections to the export of the equipment in question, the spokesman said.
More than 3,000 of the machines have been approved for export worldwide, including to China, Taiwan and Korea. The spokesman emphasized that Aixtron doesn’t produce the actual chips, only the equipment used to make them.
“We don’t have any influence on what the customer does with them and to whom he delivers,” the spokesman said.
Economics Minister Sigmar Gabriel of the center-left Social Democrats has sought to prevent foreign investors from acquiring advanced European technology.
According to the German daily Süddeutsche Zeitung, Aixtron works directly with U.S. national-security institutions such as the Defense Advanced Research Projects Agency and Sandia National Laboratories at the Albuquerque Army Air Base in New Mexico. The company also conducts classified research in several labs operated by the U.S. Energy Department.
There was initial speculation that the Economics Ministry had blocked the proposed deal due to objections from the German intelligence community. The country’s intelligence services, however, missed the possible military applications of Aixtron technology.
The decision was politically controversial among some members of Ms. Merkel’s center-right Christian Democrats, who argued that it would limit competition.
“The actions of the Economics Ministry represent a major departure for Germany as a place of business,” Michael Fuchs, the deputy head of the Christian Democrats in parliament, told Handelsblatt. “Knee-jerk reactions can carry considerable collateral damage.”
Economics Minister Sigmar Gabriel of the center-left Social Democrats has sought to prevent foreign investors from acquiring advanced European technology in the wake of the acquisition of robotics maker Kuka and other German companies by Chinese investors.
Fujian Grand Chip Investment, which is backed by state-controlled Chinese funds, offered €670 million ($730 million) for Aixtron in July. By the end of last week, Aixtron had offered a 65-percent stake to Fujian Grand Chip Investment in return.
Beijing has taken note of the growing hostility in Germany to acquisitions of high-tech companies by Chinese firms. After the Aixtron deal was blocked, a Chinese Foreign Ministry spokesman said Beijing expects the German government to treat Chinese companies fairly.
“We hope that the relevant authorities will offer Chinese companies equal opportunity,” said Foreign Ministry spokesman Lu Kang. “This would be to the advantage of both sides.”
Thomas Sigmund is Handelsblatt’s bureau chief in Berlin. To contact the author: email@example.com