Advanced Computing in the Age of AI | Wednesday, February 28, 2024

With Approvals in from the EC and the UK, AMD’s $35B Acquisition of Xilinx Now up to China 

AMD’s planned acquisition of FPGA maker Xilinx is now in the hands of Chinese regulators after needed antitrust approvals for the $35 billion deal were received from the European Commission (EC) and from the UK government this week.

The acquisition, which was announced in October of 2020, already received needed reviews and approvals from a wide swath of other governments around the world and was still awaiting action from the EC, the UK and China.

In a Form 8-K filing with the U.S. Securities & Exchange Commission on June 29 (Tuesday), AMD stated that it received final approval for the deal from the UK’s Competition and Markets Authority on June 29 and approvals from the European Commission on June 30.

“These latest approvals follow regulatory approvals from Turkey’s Competition Authority, Taiwan’s Fair Trade Commission (TFTC), Korea’s Fair Trade Commission (KFTC), the Australian Competition and Consumer Commission (ACCC) and the expiration of the waiting period under U.S. [Hart–Scott–Rodino Antitrust Improvements Act of 1976] regulatory laws," an AMD spokesperson told EnterpriseAI. “This is another important step towards closing our strategic acquisition of Xilinx by the end of this year.”

Still to be resolved is the proposed acquisition’s regulatory review and status in China, the spokesperson said. “China is the primary regulatory approval still required. We have filed our transaction with China’s State Administration for Market Regulation (SAMR). We continue working with Chinese regulators and remain on-track for approval by year’s end.”

No additional approvals are required in the U.S.

“We are on track to close by the end of the year, which was the original guidance when we announced the transaction last October,” the AMD spokesman said.

In a post on the EC's Daily News web page on July 1, the agency said that the AMD Xilinx acquisition was approved after considering the merits of the case.

"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 post states. "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."

Analysts on AMD’s Progress in the Xilinx Deal

Roger Entner, analyst

Roger Entner, founder and lead analyst of Recon Analytics, told EnterpriseAI that with the situation now in the hands of Chinese regulators, he is reminded of the words of the late Prussian general and military strategist Carl von Clausewitz.

“To paraphrase Clausewitz, in China, merger regulations are a continuation of politics by other means,” said Entner. “If the Chinese leadership wants to be nice, this can be approved tomorrow. If the Chinese leadership wants to stick it to the U.S., then this dies slow death in a folder somewhere in Beijing. If they want to remind AMD who helped them in need, then China waits a bit and approves with conditions.”

Another analyst, Kevin Krewell of Tirias Research, said that with the latest regulatory approvals from the EC and UK, AMD's plans to buy Xilinx are moving on or slightly ahead of plans.

Kevin Krewell, analyst

“I see no impediment to the deal from China, other than any purely arbitrary stipulations,” said Krewell. “I do not know what China can or will demand. Possibly more access to inventory in China in case the U.S. government imposes more sanctions against Chinese companies.”

A previous tech company acquisition, Nvidia's purchase of Mellanox in 2020, went through fairly smoothly with the Chinese government and is a good analogy to the AMD-Xilinx deal, said Krewell.

“I am excited about the deal as it gives AMD more scale and more product and channel diversity,” he said. “For those with long memories like me, there was a time back in the late 1980s when AMD was a second source for Xilinx after it bought MMI [Monolithic Memory Inc., the inventor of the PAL (programmable array logic)]. Xilinx did not like the competition and bought out AMD's second-sourcing license with Xilinx stock. AMD later sold the stock for a nice profit.”

The proposed acquisition is a good one for both companies if it is eventually approved, said Krewell.

“Xilinx brings a lot to AMD: advanced 2.5D packaging experience, its AI software and adaptive products, an established automotive business [and more],” he said. “And AMD plus Xilinx also will have more buying power with [fab vendor] TSMC.”

Details of the AMD Xilinx Acquisition

AMD’s pursuit of Xilinx started with rumors in the summer of 2020 and finally coalesced in October when the chipmaker announced its $35 billion all-stock offer for the FPGA maker.

The acquisition is seen as helping AMD keep pace during a time of consolidation in the semiconductor industry. GPU rival and market leader Nvidia acquired Mellanox for its interconnects and has a pending $40 billion proposal to buy Arm. AMD has been on a steady upward trajectory since its return to the server market with its Epyc microprocessor line in 2017.

AMD is now seriously challenging Intel in the x86 processor market although Intel retains the dominant market share. Its return to the high-end server processor market was first marked by a price-performance strategy that has since evolved to a more balanced portfolio including leading-edge parts.

AMD and Xilinx have a history of collaborating, one incentive being that Xilinx is a direct competitor to rival Intel’s FPGA unit, Altera. Intel acquired Altera in 2015. As mainstream CPU makers hustle to keep pace with GPU leader Nvidia in the race to help enterprise customers push AI workloads to production, FPGA accelerators have grown more important.

Daniel Newman, analyst

Daniel Newman, the principal analyst and CEO of Futurum Research, said he finds it interesting that the AMD Xilinx acquisition is happening at the same time as the Nvidia Arm deal, though they are different situations when it comes to the marketplace.

“While the size of this deal may draw comparisons to the Nvidia Arm deal, the impact of this [one] won't weigh nearly as heavily on the ecosystem, which is why I'm not overly concerned with Chinese regulators holding this up for any legitimate reason,” said Newman. “Having said that, I like the move for AMD, and it certainly strengthens its portfolio.”