Acquisition of German chipmaker by Taiwanese rival fails

The planned €4.35 billion acquisition of German silicon wafer manufacturer Siltronic by its larger rival, Taiwan's GlobalWafers, has failed with Berlin admitting it was unable to come to a decision on the deal in time for the January 31 deadline.

The collapse of the acquisition highlights how concerns over national security in the semiconductor sector are increasingly impacting deals in the industry.

In a statement, the German economy ministry said that "not all necessary verification steps in the investment review could be completed by the deadline".

Read more: Bosch begins SiC semiconductor production in Germany

It added: "This applies in particular to the review of the Chinese antitrust authorities’ decision to approve the transaction, which was only provided last week."

China's market regulator gave the deal the nod on January 21.

Initially, GlobalWafers released a statement saying that it would not try again. However, the statement was later retracted, leaving the door open for a second attempt.

Nonetheless, Siltronic CEO Christoph von Plotho told German daily F.A.Z that an unchanged offer would be less attractive at this moment.

"A lot has changed. Chips are scarce and prices are rising," he  told Reuters adding that "an unchanged offer is less attractive from today's perspective."

Germany's Economy Ministry, like many governments across the world, has been increasing scrutiny of planned acquisitions of the country's companies by foreign firms. This is especially true in sectors such as cybersecurity, AI and semiconductors.

Last year, authorities in Germany conducted 306 investment reviews, a huge increase on the 78 in 2019 and 106 in 2020.

The ministry said that if a second attempt by GlobalWafers was made, a new review of the deal would be undertaken. Nonetheless, Berlin's failure to clear the deal will slow down the consolidation of the long and complex semiconductor supply chain. 

Chips are vital components used in a range of consumer goods such as smartphones, computers and electric vehicles and have been in short supply for over a year.

Read more: UK launches further probe into $40bn Nvidia-Arm deal

Had the deal gone ahead, GlobalWafers, the third-largest silicon wafer manufacturer in the world, and Siltronic, which is fourth, would have merged and become the second-largest and a serious contender to top manufacturer, Japan's Shin-Etsu. 

GlobalWafers had aimed to strengthen its European presence where Siltronic is already the leading supplier.

In a statement, the Taiwanese firm said that it was "very disappointed about the outcome", adding that it would look into the German government's decision and consider its future investment strategy.

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