Italy Imposes Curbs on Pirelli’s Biggest Shareholder, Sinochem, to Safeguard Chip Technology

Italy has taken a significant step to protect sensitive chip technology from the Chinese government by imposing restrictions on Pirelli’s largest shareholder, Sinochem. The move, made under Italy’s “Golden Power” regulations, aims to safeguard assets of strategic importance to the country. This action follows similar interventions by Germany and the United Kingdom, reflecting a growing concern among European nations regarding the protection of their semiconductor technology.

Europe recently joined forces with the United States in limiting China’s access to advanced chipmaking technology, with the Netherlands announcing the introduction of export controls on ASML Holding, a crucial supplier to the global semiconductor industry. Italy’s decision to invoke the “Golden Power” regulations may further exacerbate tensions between Europe and Beijing. This development comes as US Secretary of State Antony Blinken concludes a crucial visit to China aimed at repairing strained relations between the world’s two largest economies.

Sinochem, a Chinese government-owned company, holds a 37% stake in Pirelli and occupies 60% of seats on the Italian tire manufacturer’s board. The Italian government has deemed Pirelli’s Cyber Tyre, which utilizes chip technology to collect vehicle data, as a critical technology of national strategic importance. The government order imposes various limitations on Sinochem’s involvement in Pirelli, including a prohibition on devising the company’s strategy and financial plans, as well as appointing a CEO.

The Italian government emphasized that these restrictions are intended to protect the autonomy of Pirelli and its management, as well as safeguard information of strategic importance. By refusing any information-sharing requests from Sinochem’s owner, the State-owned Assets Supervision and Administration Commission of the State Council, Pirelli aims to prevent the improper use of technology that could jeopardize user data confidentiality and compromise security-related information.

The order also mandates that at least 80% of board directors must approve certain strategic decisions, further curbing Sinochem’s influence over the company. These measures exemplify Europe’s efforts to limit China’s access to sensitive technology, motivated by ideological differences and concerns about Russia’s actions in Ukraine.

China’s Belt and Road Initiative, a vast infrastructure and investment project, is another point of scrutiny for Italy. As the only Group of Seven nation to have joined the initiative, Italy is now evaluating whether to renew its partnership with Beijing. The growing geopolitical friction has prompted multinational companies to consider protective measures for their operations. AstraZeneca, a pharmaceutical company, has reportedly developed plans to spin off its China business and list it separately in Hong Kong. Sequoia Capital, a renowned Silicon Valley venture capital group, has also announced the separation of its China investments into an independent unit.

Recognizing the need to safeguard prized EU technology, the European Commission is set to unveil measures, potentially including outbound investment screening and export controls. These efforts aim to prevent critical technologies from falling into the wrong hands, particularly from countries such as China.

Amidst ongoing tensions between Europe and China, countries are implementing diverse strategies to safeguard their strategic assets and technological advancements. The clash of interests and ideologies has sparked a reassessment of economic partnerships, as nations seek to find equilibrium between trade relations and national security priorities. These developments are driving a substantial transformation in the landscape of global technology trade and investment, fueled by geopolitical considerations and the pursuit of technological independence.