A semiconductor wafer during an Intel event ahead of a IFA International Consumer Electronics Show.
Krisztian Bocsi | Bloomberg | Getty Images

GlobalWafers, a Taiwanese firm that makes silicon wafers for computer chips, will no longer buy Munich-headquartered rival Siltronic after policymakers in Germany failed to approve the deal in time.

The deal’s collapse late on Monday evening comes as nations look to bolster their “tech sovereignty” so that they don’t have to be as reliant on other countries for critical technologies like semiconductors. Europe is currently heavily reliant on the U.S. and Asia, which are home to companies like Samsung, TSMC and Intel.

“The takeover offer by GlobalWafers and the agreements which came into existence as a result of the offer will not be completed and will lapse,” GlobalWafers said Tuesday.

Germany’s economic ministry did not clear the 4.35 billion euro ($4.9 billion) deal by the Jan. 31 deadline, meaning the proposed acquisition can’t go ahead as planned.

“It was not possible to complete all the necessary review steps as part of the investment review — this applies in particular to the review of the antitrust approval by the Chinese authorities, which was only granted last week,” a spokesperson for Germany’s economy ministry said, according to Reuters.

The takeover, approved by regulators in China on Jan. 21, would have created the second biggest maker of 300-millimeter wafers behind Japan’s Shin-Etsu.

GlobalWafers will now have to pay a termination fee of 50 million euros to Siltronic.

Wafers are a key building block in the chips that are used to power everything from iPhones to car parking sensors.

Germany, which is home to Infineon and a number of other chipmakers, has grown increasingly wary about the semiconductor global supply chain after a worldwide chip shortage hurt its well-known car industry.

The ministry said an investment review would be carried out again if GlobalWafers chose to make a new acquisition attempt.

Doris Hsu, the CEO of GlobalWafers, said the outcome was “very disappointing,” adding that the firm will “analyze the non-decision of the German government and consider its impact on our future investment strategy.”

In a statement, the company said: “Europe remains an important market for GlobalWafers and it remains committed to the customers and employees in the region.”

Shares of Siltronic were up over 2% in morning trade on the Frankfurt Stock Exchange on Tuesday.

Elsewhere, a number of other chip deals are also being probed by governments and regulators. The most notable of which is Nvidia’s $40 billion bid for U.K. chip designer Arm, which is currently owned by Japan’s SoftBank.

Critics are concerned that the merger with Nvidia — which designs its own chips — could restrict access to Arm’s “neutral” semiconductor designs and may lead to higher prices, less choice and reduced innovation in the industry. But Nvidia argues that the deal will lead to more innovation and that Arm will benefit from increased investment.