AMD’s Xilinx Acquisition Enters Second Phase Of Chinese Regulatory Scrutiny

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Chip designer Advanced Micro Devices, Inc's (AMD) bid to acquire San Jose, California-based programmable device designer Xilinx Corporation is set to enter the second phase of regulatory review in China. The deal has already been cleared by the European Commission, the United Kingdom's Competiton and Markets Authority (CMA), and its waiting period for the United States Federal Trade Commission (FTC) investigation has also expired. After approval by the three major global regulatory bodies, the Chinese approval is the final stage for the affair set to cost the company $35 billion and allow it to diversify its product portfolio to target emerging computing markets such as artificial intelligence, machine learning and fifth-generation (5G) cellular networks.

Chinese Market Regulatory Authority Investigation AMD's Xilinx Acquisition Offer To Determine Impact On Market Share

The latest details for AMD's Xilinx acquisition come courtesy of MLex and have been reported by Seeking Alpha. They suggest that China's State Administration for Market Regulation (SAMR) has contacted industry participants to gauge the impact of the deal on the market share for computing products.

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According to Seeking Alpha:

China's State Administration for Market Regulation or SAMR is believed to have reached out to industry participants a few months ago to find out their views on market definitions and market shares, according to an MLex report. Some are considering this deal similar to Intel's purchase of Altera in late 2015, which was cleared by China.

Additionally, MLex also believes that the deal has entered Phase Two of the SAMR's investigation, which involves tighter scrutiny of its effects on overall market competition. The comparison to Intel's Altera acquisition is significant, as it hints that the Xilinx acquisition might also be on its way to secure Chinese approval.

AMD is optimistic about the deal and expects it to close by the end of this year it outlined in a statement to Seeking Alpha.

Xilinx announced its Versal Adaptive Compute Acceleration Platform in June 2019. Such platforms will diversify AMD's product lineup should the deal go through. Image: Xilinx

Today's report comes after officials in the European Union's European Commission approved the deal at the close of June. The approval outlined that:

The Commission concluded that the proposed transaction would raise no competition concerns in the European Economic Area given the absence of horizontal overlaps and vertical relationships between the activities of the companies. The Commission assessed possible conglomerate effects and concluded that the transaction does not raise competition concerns in that regard, given the lack of ability and incentive to foreclose rival providers of CPUs and GPUs and the presence of alternative suppliers. The transaction was examined under the normal merger review procedure.

With only China left, AMD's acquisition has soared past GPU rival NVIDIA Corporation's bid to acquire British chip design house Arm Ltd.  In comparison to AMD's deal, NVIDIA's acquisition is broader in nature due to Arm's ubiquitous presence in the modern-day computing ecosystem.

The deal is yet to secure regulatory clearance from any major body and analysts have speculated that it is facing strong opposition in China. This is due to worries in the Asian country that if the deal follows through, then another major player in the global technology sector will come under American ownership.

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NVIDIA's chief executive officer Mr. Jen-hsun Huang has stressed his intent to keep Arm's business model unchanged post-acquisition. The company currently licenses its chip architecture (designs) to numerous companies all over the globe including Cupertino tech giant Apple, Inc and San Diego-based chip designer Qualcomm Incorporated. Advances in modern-day chip fabrication have also enabled Arm's designs to make their way to high-performance applications such as supercomputers and data centers, both of which form a crucial part of emerging trends in the sector.

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