> The planned acquisition of German chip supplier Siltronic by its bigger Taiwan rival GlobalWafers has collapsed after Berlin did not approve the transaction, highlighting how national security concerns over supply chains are shaping deals in the industry.
> The German government admitted it failed to reach a decision on its review of the deal by the January 31 deadline.
> “Not all necessary verification steps in the investment review could be completed by the deadline,” the economy ministry said in a statement. “This applies in particular to the review of the Chinese antitrust authorities’ decision to approve the transaction, which was only provided last week.”
> The failure of the €4.35bn deal comes at a time when governments around the world are subjecting cross-border high-tech transactions to ever greater scrutiny, amid fears about losing control over key technologies — especially in areas such as AI, cyber security and semiconductors. German authorities carried out 306 investment reviews last year, compared to just 78 in 2019 and 106 in 2020.
> But Berlin’s failure to clear the transaction will slow down consolidation in a critical part of the long and complex supply chain for semiconductors. The chips are crucial components in a range of products including cars and smartphones and have been in severe short supply for more than a year.
> Together GlobalWafers, the world’s third-largest manufacturer of silicon wafers, and Siltronic, which ranks fourth, would have become the second-largest and a serious rival to Japan’s Shin-Etsu, the top manufacturer. In particular, GlobalWafers had aimed at strengthening its presence in Europe, where Siltronic is the leading supplier.
> Chinese competition regulators had approved the deal on the condition that the Taiwanese company spun off Topsil, a Denmark-based unit, and continued to sell wafers to Chinese clients without discrimination.
> The demands could have complicated operations for the combined company if a third country, such as the US, imposed sanctions requiring companies to cut supplies to China in the future.
> But government officials and industry observers also noted other factors behind Berlin’s failure to clear the deal. In recent years, the German government has toughened rules for foreign takeovers of domestic companies, introducing security reviews for deals in a range of industries including semiconductors, and allowing the state to take a stake in companies if necessary to protect them.
> The German government began to increase ministers’ powers to block foreign acquisitions of strategic assets after Kuka, an industrial robot maker based in southern Germany, was bought by Chinese appliance maker Midea for €4.5bn in 2016.
> “The most likely real reason this fell through is that Germany is concerned about their technology sovereignty,” said a senior Taiwanese government official. “We understand such considerations, they are not the only ones who are increasingly looking at such factors now. But it makes the global environment for our companies more complex, just as they look to diversify their footprint.”
> Taiwan dominates semiconductor manufacturing, mainly through TSMC, the world’s largest contract chipmaker, which accounts for more than half of the global market for made-to-order chips. But the country wants to enhance its position in other areas of the industry.
> GlobalWafers said it was “very disappointed about this outcome”. The company added that it would analyse the German government’s decision and consider its impact on its future investment strategy.
> Doris Hsu, chief executive, has said in the past that GlobalWafers would pursue investments outside Europe if the Siltronic deal could not be completed.
Good news for sumco and shin etsu. Both will gobble up all 5nm and below Silicon wafers. No other competitors close… Good.
2 comments
[Archive link](https://archive.ph/1MiiB)
> The planned acquisition of German chip supplier Siltronic by its bigger Taiwan rival GlobalWafers has collapsed after Berlin did not approve the transaction, highlighting how national security concerns over supply chains are shaping deals in the industry.
> The German government admitted it failed to reach a decision on its review of the deal by the January 31 deadline.
> “Not all necessary verification steps in the investment review could be completed by the deadline,” the economy ministry said in a statement. “This applies in particular to the review of the Chinese antitrust authorities’ decision to approve the transaction, which was only provided last week.”
> The failure of the €4.35bn deal comes at a time when governments around the world are subjecting cross-border high-tech transactions to ever greater scrutiny, amid fears about losing control over key technologies — especially in areas such as AI, cyber security and semiconductors. German authorities carried out 306 investment reviews last year, compared to just 78 in 2019 and 106 in 2020.
> But Berlin’s failure to clear the transaction will slow down consolidation in a critical part of the long and complex supply chain for semiconductors. The chips are crucial components in a range of products including cars and smartphones and have been in severe short supply for more than a year.
> Together GlobalWafers, the world’s third-largest manufacturer of silicon wafers, and Siltronic, which ranks fourth, would have become the second-largest and a serious rival to Japan’s Shin-Etsu, the top manufacturer. In particular, GlobalWafers had aimed at strengthening its presence in Europe, where Siltronic is the leading supplier.
> Chinese competition regulators had approved the deal on the condition that the Taiwanese company spun off Topsil, a Denmark-based unit, and continued to sell wafers to Chinese clients without discrimination.
> The demands could have complicated operations for the combined company if a third country, such as the US, imposed sanctions requiring companies to cut supplies to China in the future.
> But government officials and industry observers also noted other factors behind Berlin’s failure to clear the deal. In recent years, the German government has toughened rules for foreign takeovers of domestic companies, introducing security reviews for deals in a range of industries including semiconductors, and allowing the state to take a stake in companies if necessary to protect them.
> The German government began to increase ministers’ powers to block foreign acquisitions of strategic assets after Kuka, an industrial robot maker based in southern Germany, was bought by Chinese appliance maker Midea for €4.5bn in 2016.
> “The most likely real reason this fell through is that Germany is concerned about their technology sovereignty,” said a senior Taiwanese government official. “We understand such considerations, they are not the only ones who are increasingly looking at such factors now. But it makes the global environment for our companies more complex, just as they look to diversify their footprint.”
> Taiwan dominates semiconductor manufacturing, mainly through TSMC, the world’s largest contract chipmaker, which accounts for more than half of the global market for made-to-order chips. But the country wants to enhance its position in other areas of the industry.
> GlobalWafers said it was “very disappointed about this outcome”. The company added that it would analyse the German government’s decision and consider its impact on its future investment strategy.
> Doris Hsu, chief executive, has said in the past that GlobalWafers would pursue investments outside Europe if the Siltronic deal could not be completed.
Good news for sumco and shin etsu. Both will gobble up all 5nm and below Silicon wafers. No other competitors close… Good.