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US intelligence has compelled Berlin to stop a $730 million Chinese acquisition of a Germany-based tech company over alleged concerns that its high-end products had “military applications” and might benefit Beijing’s nuclear program, Handelsblatt reports.
The German Economy Ministry announced on Monday that it had canceled its approval for China’s Grand Chip Investment Fund (FGC) to purchase the Aachen-based high-tech company Aixtron for $732 million (€670 million), citing “security-related information” that emerged. A review of the deal is pending.

US secret services were behind the unexpected decision, Handelsblatt newspaper reported on Thursday, citing sources within the German intelligence community.

According to the report, during a meeting at the US embassy in Berlin, American officers showed German government officials evidence that Aixtron’s technology also has “military applications,” although they had refused to hand the evidence over.US intelligence officers had reportedly said Washington is concerned about Beijing’s capabilities to use Aixtron equipment or technology to produce electronic chips for its nuclear program.

The company’s equipment is used to deposit chemical layers on silicon wafers, mainly to makers of LED (light-emitting diode) chips.

“Aixtron is not involved in the design, development, or production of its customers’ semiconductor devices,” the group said, as quoted by Reuters.

The firm also added it had sold several hundred systems to China over the past 30 years in deals cleared by the German authorities.

Around 60 percent of Aixtron revenues come from clients in Asia, with 22 percent coming from the US and the remaining 18 percent from Europe, the company said in a 2015 annual report.

German’s Economy Ministry chose not to comment on Handelsblatt article and refused to disclose the “origin or the nature” of the information that led to the takeover deal being withdrawn. Aixtron said it has not yet received any questions from the ministry regarding the review.

Meanwhile, Argonaut Capital, the largest shareholder in the Aixtron, said Berlin’s decision to review the agreed takeover by Chinese investment fund Fujian Grand Chip has been “irresponsible,” according to Reuters.

Argonaut CEO Barry Norris said it was based on “highly-dubious allegations.”

Norris said the “protectionist posturing over Chinese investment would seem utterly irresponsible for Aixtron’s stakeholders… and set an alarmingly arbitrary precedent for future government interference in EU financial markets.”

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