Reporting by XinZhiyuan
Edit: David
The State Administration for Market Regulation issued an announcement yesterday to conditionally approve chip company AMD's $35 billion acquisition of Xilinx, the world's largest FPGA manufacturer, clearing the final regulatory hurdle for the acquisition, which is expected to be completed in the first quarter of this year.
Yesterday, the State Administration for Market Regulation announced that it has conditionally approved the $35 billion acquisition of FPGA maker Xilinx by AMERICAN chip company AMD, removing the last major regulatory hurdle for the final realization of this huge merger deal.
The State Administration for Market Regulation's Antitrust Bureau issued an online announcement on Thursday that it had approved the M&A deal between AMD and Xilinx in October 2020 under "additional restrictive conditions."
Previously, the transaction has been approved by market regulators in many countries and economies, including the European Union, the United Kingdom and the United States.
Last month, Intel's sale of its flash memory chip business to South Korea's SK Hynix for $9 billion was approved by China's State Administration of Market Regulation, clearing the deal's final hurdle on the way forward.
In 2018, Qualcomm canceled plans to buy NXP Semiconductors for $44 billion after delaying chinese regulatory approval.
It is possible to merge, but it is not allowed to bundle sales and discriminate against Chinese customers
The announcement was issued by the Anti-Monopoly Bureau of the State Administration for Market Regulation on the afternoon of January 27.
The announcement requires that after the merger of the two entities, it is necessary to maintain or expand investment in core technology research and development activities in China. In addition, the combined entity must sell products to Chinese customers on fair, reasonable and non-discriminatory terms.
Specifically, in the last part of the announcement, the "Review Decision" section, the five-point requirements for approving the merger and acquisition are listed, the core content of which is to prohibit the merged entity from using the advantages of the technology portfolio to carry out bundled sales or differentiated supply.
The five specific requirements are as follows:
(1) When selling Chaowei CPUs, Chaowei GPUs and Xilinx FPGAs to the domestic market in China, it shall not be forced to tie-in in any way, or attach any other unreasonable trading conditions; shall not hinder or restrict customers from purchasing or using the above products alone; and shall not discriminate against customers who purchase the above products alone in terms of service level, price, software function, etc.
(2) On the basis of existing cooperation with enterprises in China, further promote relevant cooperation, and continue to supply Chaowei CPUs, Chaowei GPUs, Xilinx FPGAs and related software and accessories to the Chinese domestic market in accordance with the principles of fairness, reasonableness and non-discrimination.
(c) ensure the flexibility and programmability of Xilinx FPGAs, continue to develop and ensure the availability of Xilinx's FPGA product family, and ensure that they are developed in a manner that is compatible with ARM-based processors and in line with Xilinx's plans prior to trading.
(4) Continue to ensure the interoperability of Chaowei CPUs, Chaowei GPUs, Xilinx FPGAs and third-party CPUs, GPUs and FPGAs sold to the domestic market in China; the above interoperability level is not lower than the interoperability level of Chaowei CPUs, Chaowei GPUs and Xilinx FPGAs; and the relevant information, functions and samples of interoperability upgrades shall be provided to third-party CPUs, GPUs and FPGA manufacturers within 90 days after the upgrade.
(5) Take protective measures against the information of third-party CPUs, GPUs and FPGA manufacturers, sign confidentiality agreements with third-party CPU, GPU and FPGA manufacturers, and store the confidential information of third-party CPU, GPU and FPGA manufacturers in separate and non-communicative hardware systems.
The announcement also requires that these conditions apply for at least six years, and that the combined entity must report to regulators every six months on the implementation of these commitment programs.
The full text of the announcement can be found at:
https://www.samr.gov.cn/fldj/tzgg/ftjpz/202201/t20220127_339441.html
$35 billion! The largest acquisition in AMD's history
In October 2020, AMD, the world's second-largest desktop and server processor vendor, announced its intention to acquire Xilinx, the world's largest FPGA vendor, for a $35 billion all-share transaction.
Su Zifeng will lead the combined company as CEO. Xilinx President and CEO Victor Peng will join AMD as President of Xilinx Business and Strategic Growth, effective from the date of completion of the transaction.
AMD shareholders will own 74 percent of the combined company; Xilinx shareholders will own 24 percent.
"This combination will create significant value for all shareholders, including all AMD and Xilinx shareholders, who will benefit from the future growth and upside potential of the combined company," Su said.
"Xilinx is one of the strongest teams in the industry and we are thrilled to welcome them to the AMD family. By combining our world-class engineering teams and expertise, together we will build an industry leader with the vision, talent, and scale to define the future of high-performance computing." Su Zifeng said
FPGAs, or field-programmable gate arrays, are semiconductor devices based on a configurable logic block (CLB) matrix connected through a programmable interconnect. In contrast to application-specific integrated circuits (ASICs) that are custom manufactured for specific design tasks, FPGAs can be reprogrammed after manufacturing to meet the desired application or functional requirements.
Founded in 1984, Xilinx, along with Altera and known as FPGA Twins, is the inventor of FPGAs, programmable SoCs and CAPs, and highly flexible programmable chips are powered by a range of advanced software and tools that have broad prospects in computing at the cloud and edge.
In 2015, Altera, the world's second-best FPGA, was acquired by AMD's old rival Intel for $16.7 billion.
FPGAs can be regarded as the "Lego" of the digital world, and with the rapid development of 5G communications, big data, and the Internet of Things, the importance of FPGAs has become increasingly prominent. FPGAs can be customized to develop a variety of computing acceleration capabilities, whether it is edge data processing or high-performance computing in the data center.
In the global market, Xilinx, Altera, Lattice and Microsemi have almost monopolized the FPGA market. Among them, Xilinx is in a leading position in technology, with a market share of 50%.
AMD will be ranked among the world's top 10 semiconductor companies
According to estimates by market research firm IC Insights, AMD revenue is expected to increase by 65% year-on-year to more than $16 billion in 2021 (Q3 revenue has been announced, $4.3 billion). Xilinx expects revenue to exceed $3 billion in 2021.
After the merger, the two are expected to enter the list of the world's top ten semiconductor companies, and can be ranked ninth according to current estimates, after Qualcomm, Nvidia and Broadcom, which also belong to the chip design industry.
Although the FPGA market itself is not large, it is the key to many hundreds of billions of dollars in 5G communications, data centers, unmanned driving, defense and so on.
AMD's successful acquisition of Xilinx will undoubtedly help it further strengthen the data center market and thus gain wider access to customers in industrial, automotive and other industries.
Because Of China's "Green Light," the merger is expected to close as soon as the first quarter of this year.
Resources:
https://www.eet-china.com/mp/a107885.html
https://www.wsj.com/articles/amds-planned-purchase-of-xilinx-clears-last-big-regulatory-hurdle-11643290640?mod=Searchresults_pos1&page=1
https://www.icinsights.com/news/bulletins/17-Semiconductor-Companies-Forecast-To-Have-100-Billion-In-Sales-This-Year/
The full text of the Announcement of the State Administration for Market Regulation on Approving the Anti-Monopoly Review Decision of Chaowei Semiconductor Company's Acquisition of Xilinx's Equity in Xilinx with Additional Restrictive Conditions: