On January 27, the State Administration of Market Supervision issued the announcement of the State Administration of market supervision on the anti-monopoly review decision of the case of approving Chaowei semiconductor’s acquisition of Xilinx’s equity with additional restrictive conditions (hereinafter referred to as the announcement). The announcement puts forward five requirements for both parties of the transaction. In other words, as long as the five requirements put forward in the review decision are met, the Chinese market regulatory authorities will agree to the merger.
Previously, the relevant market regulatory authorities in the UK and the United States gave the green light to AMD’s acquisition of Xilinx. The announcement of the State Administration of market supervision and administration means that AMD’s last checkpoint on the road of M & A Xilinx has been opened.
count eight restrictions on competition hazards, and the green light is still on
In the announcement issued on January 27, the State Administration of market supervision analyzed the possible impact of AMD’s merger and acquisition of Xilinx on market competition in accordance with the anti-monopoly law of the people’s Republic of China. The analysis conclusion is that this M & A has or may have the effect of excluding and restricting competition in the global and domestic CPU, GPU accelerator and FPGA markets. Among them, Xilinx occupies 50-55% of the global and China’s market share respectively. The merged entity has the ability to use its FPGA market power to influence the competitiveness of competitors by tying CPU and GPU accelerator; After centralization, the entity may reduce the interoperability between the third-party CPU, GPU accelerator and FPGA; High barriers to market entry make it difficult for new effective competitors to appear in the short term.
In short, AMD and Xilinx have strong strength, especially Xilinx accounts for half of the global FPGA market. If they are successfully merged and sold in bundles, other market participants will only envy them.
Therefore, the Chinese market supervision department has given five commitment schemes with restrictive conditions:
(1) when selling Chaowei CPU, Chaowei GPU and Xilinx FPGA to the domestic market of China, it shall not be forced to tie in in any way or attach any other unreasonable trading conditions; Do not hinder or restrict customers from purchasing or using the above products alone; It is not allowed to discriminate against customers who separately purchase the above products in terms of service level, price, software function, etc.
(II) further promote relevant cooperation on the basis of existing cooperation with enterprises in China, and continue to supply Chaowei CPU, Chaowei GPU, Xilinx FPGA and relevant software and accessories to the domestic market in China in accordance with the principles of fairness, rationality and non discrimination.
(III) ensure the flexibility and programmability of Xilinx FPGA, continue to develop and ensure the availability of Xilinx FPGA product series, and ensure that its development method is compatible with arm based processor and conforms to Xilinx’s plan before transaction.
(IV) continue to ensure the interoperability of Chaowei CPU, Chaowei GPU and Xilinx FPGA sold to the domestic market of China with third-party CPU, GPU and FPGA; The above interoperability level shall not be lower than that of Chaowei CPU, Chaowei GPU and Xilinx FPGA; Relevant information, functions and samples of interoperability upgrade shall be provided to the third-party CPU, GPU and FPGA manufacturers within 90 days after the upgrade.
(V) take protective measures for the information of third-party CPU, GPU and FPGA manufacturers, and 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 non interconnected hardware systems.
“For business concentration cases, the most concern is whether M & A will restrict or weaken competition. If this happens, we need to consider whether restrictive conditions, including structural and behavioral conditions, need to be set to maintain the market competition environment.” An industry expert pointed out to the reporter of China Electronics News.
The so-called structural conditions mainly include stripping tangible assets, intellectual property rights and other intangible assets or related rights and interests; Behavioral conditions mainly include infrastructure such as open networks or platforms, licensing key technologies (including patents, know-how or other intellectual property rights), termination of exclusive agreements, etc. The combination of structural conditions and behavioral conditions constitutes comprehensive conditions.
Experts pointed out to reporters that in the two recent antitrust review cases, structural and behavioral restrictions were used in the case of global wafer’s acquisition of Shichuang. In the case of AMD’s acquisition of Xilinx, behavioral restrictions were mainly used. The restrictive conditions have a certain time limit. In the process of annual implementation, the third party will supervise and judge. After the expiration, the restrictive conditions will be lifted only after the application of the acquirer and the review of relevant departments. In the process of setting conditions, relevant departments have fully absorbed the opinions and suggestions of the industry and upstream and downstream enterprises, so as to minimize the adverse impact of M & A on competition fairness.
Such as NVIDIA’s $40 billion acquisition of arm and SK Hynix’s $9 billion acquisition of Intel’s NAND flash business. For Chinese enterprises that distribute related products, the merger and acquisition alliance between giants will undoubtedly make the international influence of the acquirer greater, and then make the Matthew effect in related fields more obvious. Therefore, it will be more difficult for Chinese enterprises in the climbing period to enter the market. From this perspective, the impact of M & A among large enterprises on Chinese related business enterprises is unfavorable.
However, from a market perspective, 50% ~ 55% of China’s FPGA market share is provided by Xilinx. If enterprises are prevented from M & A, the channel for products to enter China will be blocked, which will have a more adverse impact on Chinese enterprises in relevant supply chains.
M & A, a new starting point for growth
When amd announced its acquisition of Xilinx in October 2020, it mentioned: “This acquisition brings together two industry leaders with complementary products. AMD will provide the industry’s most powerful combination of high-performance processor technologies, combining CPU, GPU, FPGA, adaptive SOC and deep software expertise to provide a leading computing platform for cloud computing, edge and terminal devices. The combined company will make full use of everything from data centers to games, personal computers Opportunities in the most important growth areas of industries such as communications, automotive, industry, aerospace and defense. “
In this regard, Teng ran, general manager of CCID Consulting integrated circuit industry research center, said in an interview with China Electronics News that for AMD, if the acquisition is successfully completed, its influence in 5g communication, data center, driverless, information security and many other fields will be further improved. In the future, the data center business may help amd obtain higher profits and a bigger market. Teng ran said: “at present, the AMD market has reached about 65% of Intel’s market value, reflecting the recognition of AMD in the capital market.”
In addition to the voice of recognition of AMD’s acquisition, there are also voices in the industry expressing concern about this. This concern mainly comes from AMD’s past M & A experience.
In 2006, amd acquired GPU company ATI for us $5.4 billion. While building its own GPU department, amd also bears the huge financial pressure brought by the pressure of building product line and Intel NVIDIA.
For AMD’s merger and acquisition, some voices in the industry worry that AMD will encounter the financial crisis caused by merger and acquisition more than ten years ago. In this regard, Teng ran believes that at present, AMD’s market share and market value are rising. Considering that AMD may use shares to complete transactions, it will also help reduce the working capital pressure of enterprises.
For Xilinx, M & A will also bring advantages to business improvement.
Being merged has almost become the only way for FPGA leading enterprises. In addition to Xilinx, which ranks first in the global FPGA field, Altera ( Iat Automobile Technology Co.Ltd(300825) LA), which ranks second in the global FPGA market, was acquired by Intel for us $16.7 billion in 2015, Actel was acquired by MICROSEMI in 2010, and lattice also announced that it would accept the acquisition of Canyon Bridge Capital Partners.
FPGA chip is a basic product in 5g communication, data center and many other market hot fields, but its own market scale is small, and the global FPGA chip market space is about 9 billion US dollars.
Teng ran believes that if such chips only play the role of “accelerator”, the market ceiling will be limited. The long-term solution is to accelerate the integration with CPU / GPU manufacturers and fully release their “accelerator” characteristics.
Thus, Xilinx was acquired by AMD, which is also in line with the “general trend” of FPGA market development.
refers to Intel, or focuses on data center business
The enemy of an enemy is a friend.
This iron law has made a perfect annotation to the merger.
Whether for Xilinx or AMD, Intel is its biggest competitor.
Data show that Xilinx occupies half of the global FPGA market share, and after the successful acquisition of Altera, Intel has become Xilinx’s biggest competitor with a global market share of about 34%.
There is no need to say more about the market competition relationship between AMD and Intel.
As a CPU supplier, AMD, as the “second in ten thousand years”, has long been subordinate to Intel
comparison of market share of all CPUs between AMD and Intel
(as of January 27, 2022)
Among many CPU market categories, amd only achieved the anti surpassing of Intel in the desktop CPU market in the first quarter of 2021: AMD surpassed Intel with 50.8% of the global desktop CPU market
amd vs. Intel Desktop CPU market share
(as of January 27, 2022)
Compared with Intel’s previous acquisition of FPGA manufacturer Altera, AMD’s acquisition of Xilinx can further show the importance of data center in the future and reflect the significance of FPGA to the development of data center in the future.
According to Intel’s latest financial report for the fourth quarter of 2021, data center is Intel’s second largest business, becoming Intel’s second largest revenue source in the fourth quarter of 2021 with us $730 million.
When amd released its third quarter report in October 2021, amd president and CEO Su Zifeng Bosch said: “the sales of data center has more than doubled year-on-year.”
In addition, song Changgeng, director of SIMU research, believes that AMD’s acquisition of Xilinx is similar to its previous acquisition of ATI and is to supplement its own product line to compete with Intel. In an interview with China Electronics News, he said: “general purpose computing chips include CPU and GPU (including GPGPU) And FPGA. At present, Intel has the most complete categories. Amd already has CPU and GPU products, and is acquiring Xilinx to supplement FPGA products. NVIDIA is a leading enterprise in the GPU field and is also trying to supplement its weakness in CPU through the acquisition of arm. Its logic is interlinked. The development trend of general computing chips is very obvious. Leading enterprises are actively improving their product lines and striving to achieve comprehensive coverage. This is because with the popularity of artificial intelligence technology in industrial and personal applications, there will be great differences in chip computing power, deployment flexibility and algorithm adaptability in different application scenarios. It is impossible to rely on CPU or GPU to dominate the world. “
It can be predicted that the acquisition of Xilinx alone will not make amd realize a qualitative leap in the computing chip market. How to make good use of FPGA to maximize its value in AMD’s computing landscape and enhance the attractiveness of AMD’s computing architecture and computing power ecology are the key indicators to evaluate the effectiveness of the acquisition. How AMD will solve problems and hand over answers will become the common expectation of downstream enterprises and computing power market.
