BelGaN bankruptcy raises questions about foreign interference

The recent bankruptcy filing of BelGaN, a Belgian computer chip maker, highlights the challenges Europe faces in meeting its industrial goals and the complexities of eliminating Chinese ownership. BelGaN had been operating in Belgium for four decades before it filed for bankruptcy this month.

Behind the downfall is a mix of bad decisions. Oudenaarde had already suffered significant losses and was betting on new, capital-intensive technology to drive growth. Moreover, concerns about Chinese owners remained after two Hong Kong-based funds took over the plant in 2021. This is what Politico writes..

Fears of foreign interference

The EU’s goals often conflict with each other. In 2023, the EU adopted a €43 billion microchip plan to quadruple its share of the global chip market to 20 percent by 2030. The plan aims to reduce the region’s dependence on major manufacturing hubs in Taiwan, the United States, South Korea and China.

However, the European Commission also considers microchips to be a critical technology, and EU countries are increasingly asking critical questions about foreign, and especially Chinese, control of the technology. The EU’s concerns about foreign ownership have led to many Western companies being drawn into this geopolitical tug-of-war.

Chinese influence

BelGaN is a prime example of a company caught in this fray. While Europe is doling out billions in government subsidies to the sector, directly helping Chinese companies could be problematic.

BelGaN has changed ownership several times. The most recent change came in 2021 when two Hong Kong-based funds acquired the plant from U.S. chipmaker Onsemi. The new owners appointed Alan Zhen Zhou as BelGaN’s CEO.

The company has invested heavily in a new production process and focused on gallium nitride wafers instead of silicon. The technology has the potential to increase energy efficiency and tap into the electric vehicle market. Last year, BelGaN received European R&D support as a partner in a series of projects that received €8 billion in government aid.

Despite these efforts, BelGaN suffered a setback in 2023 when it posted a net loss of €8.3 million on sales of €55 million, partly due to rising energy, chemicals and labor costs. The company expressed doubts about whether R&D support could actually help with actual production.

BelGaN no longer has time to capitalize on market opportunities. The trustees are now looking for new investors to revive the company. The Flemish government is open to facilitating new private investors through co-investment or guarantee.

Key points

• BelGaN’s bankruptcy highlights the complexity of Europe’s industrial targets and concerns about Chinese ownership.
The EU’s €43 billion microchip plan aims to reduce the region’s reliance on major manufacturing hubs in Taiwan, the United States, South Korea and China.
• BelGaN is a prime example of a company that has become embroiled in a “geopolitical tug of war” over its ties to China.

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