China Finally Approves AMD’s $35 Billion Acquisition Of Xilinx But Under A Few Conditions
After Intel acquired FPGA chips manufacturer Altera back in 2015, AMD realized this could give Intel a competitive boon in the datacenter market. So, in 2020, AMD moved ahead to acquire Xilinx, a Chinese chip manufacturer of their own that also happens to specialize in FPGA chips. This deal was supposed to be massive, the biggest ever in the semiconductor industry, in fact, prized at $35 billion. However, like many big tech acquisitions, it was met with scrutiny and a lot of raised eyebrows.
Even though AMD faced some backlash and had a hard time convincing regulatory bodies, they still managed to get official approval for the deal from every single application country, except China. China was being a little extra about it because Xilinx, being a Chinese company, meant that AMD could gobble it up and affect China’s efforts to reduce dependency on foreign silicon.
From the original October 2020 announcement date of the deal, all the way up till the first quarter of 2022, China’s State Administration for Market Regulation (SMAR) kept investigating it to make sure it won’t be anti-competitive. Finally, after all that probing, Reuters is reporting that SMAR has agreed to approve the deal but under certain conditions.
These conditions basically amount to China telling AMD to not force Xilinx customers to buy AMD products and vice-versa. Instead, both parties should work largely independent of each other. China wants to ensure “the flexibility and programmability of Xilinx FPGAs” and “that their development methods are compatible with ARM-based processor“. This is because China is heavily-invested in the market for ARM products and sees a future in becoming a major developer of them.
With this confirmation, AMD’s merger with Xilinx should now have no barriers in between and the deal is as good as complete. AMD will of course commit to these six-year conditions as they don’t demand anything out of the ordinary and will the deal will prove more beneficial for the red team more than agreeing on these conditions could ever harm them.
This will allow AMD to gain a stronghold in the FPGA market along with datacenters where AMD does not have a significant market share. The deal has already been approved in US, UK, and Europe and comes in the form of an all-stock deal. If you want to read the full statement from China’s regulatory authority, you can check it out here. We’ve attached the English-translated version of their statement below.
[…] Review decision
In view of the fact that this concentration of operators in the CPU , GPU accelerator and FPGA markets has or may have the effect of eliminating or restricting competition, the State Administration for Market Regulation has decided to approve this concentration with additional restrictive conditions based on the commitment plan submitted by the declarer. Both parties to the transaction and the entity after concentration perform the following obligations:
- When selling Chaowei CPU , Chaowei GPU and Xilinx FPGA to the Chinese domestic market , tie-in sales shall not be forced in any way, or any other unreasonable transaction conditions shall be attached; customers shall not be hindered or restricted from purchasing or using alone The above- mentioned products; customers who purchase the above-mentioned products alone shall not be discriminated against in terms of service level, price, software function, etc.
- On the basis of existing cooperation with Chinese domestic enterprises, further promote relevant cooperation, and continue to supply Chaowei CPU , Chaowei GPU , Xilinx FPGA and related software to the Chinese domestic market in accordance with the principles of fairness, reasonableness and non-discrimination ,Accessories.
- Ensure the flexibility and programmability of Xilinx FPGAs , continue to develop and ensure the availability of Xilinx FPGA product families, and ensure that their development methods are compatible with ARM -based processors and in line with Xilinx’s trading previous plan.
- Continue to ensure the interoperability of Chaowei CPU , Chaowei GPU , Xilinx FPGA and third-party CPU , GPU and FPGA sold to the domestic market of China ; the above- mentioned interoperability level is not lower than that of Chaowei CPU , Chaowei Level of interoperability between GPUs and Xilinx FPGAs ; information, features, and samples on interoperability upgrades should be made available to third-party CPU , GPU , FPGA manufacturers within 90 days of upgrade.
- Take protective measures for the information of third-party CPU , GPU and FPGA manufacturers , sign confidentiality agreements with third-party CPU, GPU and FPGA manufacturers; store the confidential information of third-party CPU , GPU and FPGA manufacturers in independent and in hardware systems that do not communicate with each other.
In addition to the supervision and implementation of restrictive conditions in accordance with this announcement, the commitment plan for additional restrictive conditions submitted by Chaowei to the State Administration for Market Regulation on January 13, 2022 is legally binding on both parties to the transaction and the entity after the concentration. From the effective date, both parties to the transaction and the entity after the concentration shall report the implementation of this commitment plan to the SAMR semi-annually.
After 6 years from the effective date , the post-concentration entity may apply to the State Administration for Market Regulation to lift the conduct conditions. The State Administration for Market Regulation will make a decision on whether to cancel the application based on the application and market competition. Without the approval of the State Administration for Market Regulation , the entity should continue to fulfill the restrictive conditions after the concentration.
The State Administration for Market Regulation has the right to supervise and inspect the performance of the above obligations by the two parties to the transaction and the entity after the concentration by supervising the trustee or by itself . If both parties to the transaction and the entity after the concentration fail to perform or violate the above obligations, the State Administration for Market Regulation will deal with it in accordance with the relevant provisions of the Anti-Monopoly Law.
This decision will take effect from the date of the announcement.
State Administration for Market Regulation