China and Russia are illegally obtaining advanced chip tech from France

• Ommic’s French manager personally delivered chips to clients in Russia and exports to armament manufacturers in China.
• Investigators have uncovered nearly €12 million worth of suspected exports of technology.

Just over a month ago, US-based semiconductor company, Macom Technology Solutions Inc, completed its acquisition of French semiconductor manufacturer Ommic SAS. Not too long after, Ommic’s French manager was suspected of personally delivering chips to clients in Russia and to armament manufacturers in China.

According to a French daily, Le Parisien, the country’s magistrates have filed preliminary charges against two Chinese citizens and two other people from France in an investigation of the country’s leading chip supplier whose advanced technology with possible military uses was reportedly smuggled to China and Russia, skirting sanctions and export controls.

For context, European countries are increasingly adopting a harsher approach to China, as the bloc is doing all it can to decrease its reliance on the country. The European Commission has reiterated its new policy of “de-risking” its economy from China, cementing its rejection of complete economic decoupling. They would screen Chinese investments while still trying to maintain trade ties with the world’s second-largest economy.

How did China and Russia get involved?

A Chinese businessman with ties to China’s defense industry bought a majority stake and took control of Ommic in 2018. According to Le Parisien, the Chinese businessman bought 94% of Ommic’s shares via a French-based investment fund in a bid to transfer technologies to China and Russia.

Before Macom, a semiconductor supplier based in Lowell, Massachusetts, announced in February that it was acquiring Ommic for €38.5 million, French judicial authorities stripped Ommic’s Chinese investor of his stake. They temporarily placed the company under state control before its sale.

A check online shows Ommic technologies include gallium nitride chips which can operate at a higher frequency, power, and temperature than others, with broad applications including weapons. Macom said Ommic’s portfolio of chips and its design know-how would strengthen its position in telecommunications, industrial, aerospace, and defense markets.

The French newspaper also reported Ommic put in place a complex scheme to transfer equipment to Russia despite the EU’s export restrictions on technology used for military purposes after the invasion of Crimea.

Overall, Le Parisien’s report noted that the French authorities had uncovered nearly €12 million worth of suspected exports of technology in total. Reports also claim that Ommic’s French manager is suspected of personally delivering chips to Russian clients. It said products were also exported to Chinese armament manufacturers with the help of forged paperwork.

What are the French authorities doing about industry espionage?

A person who asked not to be identified because the probe isn’t public told Le Parisien that four people face prosecution, including two who are being pursued allegedly sharing documents with a foreign power, which is likely to harm the interests of the French state. Overall, the person said the investigation concerns suspicions of illegal exports, criminal conspiracy, forgery, and misuse of corporate assets.

“The probe of Ommic, a semiconductor manufacturer based in the Paris region and now in American hands, was launched by France’s national prosecution service that specializes in cases involving arms proliferation,” a report by Euronews reads. 

Separately, France’s industry minister Roland Lescure told Sud Radio, a domestic media company, last week that when the government calls out and warns about the risk of industrial espionage, “it’s not like playing James Bond.”

“Economic war exists, and France has the means to win it,” Lescure added. Ironically, news of the probe comes at the heels of France’s Finance Minister Bruno Le Maire’s upcoming travel to China to meet his Chinese counterpart and business leaders. The meeting is seen as an attempt to woo Chinese investors back to Paris.

The France-China relation

France was the first major Western country to enter into diplomatic relations and establish a full partnership with China. In 1997, President Jiang and visiting French President Chirac signed the Joint Sino-French Statement, deciding to develop a full partnership towards the 21st century. 

Today, China is France’s third largest trade partner behind the European Union and the US. Still, French firms are becoming increasingly concerned they could get caught in the crossfire of rising rivalry between the world’s two economic superpowers. 

Le Maire even clarified on July 30 after meeting top Chinese officials that France wants better access to the Chinese market and a more “balanced” trade relationship, not a “decoupling” from the world’s second-biggest economy.

“We don’t want to face some legislative hurdles or some other barriers to access the Chinese markets,” Le Maire told a press conference in Beijing a day after what he called “constructive” trade talks with Vice Premier He Lifeng. At the same meeting, He said China hoped France could “stabilize the tone” of EU-China relations, while Beijing was willing to deepen cooperation with Paris in some areas.

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