China approves AMD's US$35b acquisition of Xilinx

[BEIJING] Chinese regulators have granted approval for Advanced Micro Devices (AMD) to buy Xilinx, clearing the way for one of the largest deals to emerge from the global semiconductor industry.

The State Administration for Market Regulation has cleared the deal with certain conditions, the antitrust watchdog said in a statement. It asked AMD not to discriminate against Chinese clients and to continue supplying Xilinx's products to the country, after determining the deal could exclude or limit competition. The acquisition had already won the blessing of regulators in the US, Europe and UK, among other jurisdictions.

Xilinx's shares gained more than 6 per cent in pre-market trading in New York, while AMD rose slightly. The US chipmaker, which competes with Intel and Nvidia in computer and graphics processors, unveiled the deal in 2020. Chief executive officer Lisa Su's signature deal was intended at the time to help AMD redouble efforts to challenge Intel for the lead in chips. Buying Xilinx, a maker of programmable silicon, will take AMD into areas such as automotive and communications networking, while bolstering its offerings in the lucrative market for cloud data centre components.

The approval could help assuage fears that governments including China are growing resistant to mega-mergers in semiconductors as shortages of the vital components persist.

Global chip takeovers had faced potential headwinds because governments now treat semiconductor technologies and supply as a national security issue, particularly following a prolonged deficit of critical microelectronics that walloped the car industry and undermined post-Covid economic recoveries.

Nvidia is preparing to abandon its purchase of British chip company Arm from SoftBank Group after drawing backlash from regulators and making little to no progress in winning approval for the US$40 billion deal, Bloomberg News reported this week. During the process, Nvidia's bid faced a national security review in the UK.

Nations including the US, Japan and China are racing to protect and build their own chip technologies and a domestic production chain, to ensure future supply and shield their economies from another semiconductor crunch. Growing tensions have also spurred Washington and Beijing to blocking some chip deals, out of fear their geopolitical rival could gain a technological edge.

In 2018, Qualcomm scrapped its US$44 billion bid for rival chipmaker NXP Semiconductors after Chinese regulators failed to give their blessing. Even minor deals are getting scrutinised. China's Wise Road Capital terminated its US$1.4 billion offer for South Korean chipmaker Magnachip Semiconductor in 2021 after failing to win approval from the Committee on Foreign Investment in the United States. BLOOMBERG