CN09 - SAMR conditionally approves two mergers in the technology sector
01 March 2022
01 March 2022
In January 2022, the State Administration of Market Regulation ("SAMR") conditionally approved two merger transactions in the technology sector - the acquisition of Siltronic AG by Global Wafers and the acquisition of Xilinx by Advanced Micro Devices. These two cases demonstrate SAMR's ongoing mandate to regulate activity taking place in the growing digital and technology sectors.
Key takeaways
- The SAMR approved the Siltronic / GlobalWafers transaction subject to a number of remedies, including requiring the merged entity to divest a part of its business and commit to supply customers on fair, reasonable and non-discriminatory terms ("FRAND Terms"). While the transaction was cleared, the parties were ultimately unable to obtain foreign direct investment approval in Germany by the long-stop date and as a result, the transaction did not proceed.
- The SAMR approved the AMD / Xilinx transaction subject to a number of conditions, including requiring the merged entity to continue to allow its products to be purchased individually (rather than bundled) and on FRAND Terms, and to guarantee the interoperability of its products.
- These transactions are the first to be conditionally approved by SAMR in 2022.
Taiwan listed GlobalWafers and German listed Siltronic AG are involved in the production of silicon wafers, which are commonly used in semiconductor products including computer memory chips, microprocessors and integrated circuits. Silicon wafers are typically produced in three standard sizes, with 8-inch wafers being the most commonly used size.
The SAMR raised concerns that this transaction might have the effect of eliminating or restricting competition in the global and domestic markets for 8-inch fused wafers. The SAMR had a number of concerns, including that:
Notwithstanding these competition concerns, the SAMR ultimately approved the transaction subject to a number of conditions requiring the merged entity to:
While the transaction was cleared by the SAMR, the parties were ultimately unable to obtain foreign direct investment ("FDI") approval in Germany by the long-stop date and as a result, the transaction did not proceed. It remains unclear whether the transaction would have received FDI clearance in Germany. In light of legislative amendments to German foreign trade law, the scope of foreign direct control was expanded with regard to semiconductor manufacturers and other related businesses, with effect from 1 May 2021, and it is expected that the German government identified serious issues with the transaction.
US chip manufacturer Advanced Micro Devices ("AMD") is involved in the production of computer components, including central processing units ("CPU") and graphics processing units ("GPU"). Xilinx, another US technology company, is involved in the production of programable gate arrays ("FPGA"), which are a type of semi-customisable integrated circuit.
The SAMR raised concerns that the transaction might have the effect of eliminating or restricting competition in the global and domestic markets for CPUs, GPU accelerators and FPGAs. The SAMR had a number of concerns, including that:
Notwithstanding these competition concerns, the SAMR ultimately approved the transaction subject to a number of conditions requiring the merged entity to:
The outcome in these two cases demonstrates that the SAMR is:
With thanks to Rubaina Sehgal of Ashurst for her contribution.
The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to.
Readers should take legal advice before applying it to specific issues or transactions.