By Markus Wacket

BERLIN (Reuters) – Germany’s economy ministry has recommended to the cabinet that the government block the Chinese takeover of Elmos’ chip factory, saying it would pose a threat to national security, ministry sources said on Tuesday.

Milder measures, such as an injunction, are not suitable for addressing the identified dangers, added the sources.

Elmos said on Monday that the German government would likely block the sale to competitor Silex, a Swedish company that is a subsidiary of Chinese group Sai Microelectronics.

The sources said the economy ministry and the government are currently working on a China strategy focused on reducing one-sided dependencies and encouraging diversification, as well as protecting infrastructure and preventing technology leakage.