The German government will likely block the Chinese takeover of Elmos' chip factory, the Dortmund-based company said on Monday.
The economics ministry had been examining the sale to competitor Silex, a Swedish company that is a subsidiary of Chinese group Sai Microelectronics .
The deal "will most likely be prohibited" in a "new development", Elmos said on Monday.
Until Monday, the ministry "had indicated to the parties that the transaction most likely will be approved".
Elmos said that it would examine further steps "after receiving the final assessment".
Silex did not immediately respond to a request for comment outside of normal business hours.