AMD’s acquisition of Xilinx appears to have cleared a major hurdle, with China’s market regulator giving conditional approval. The news, which was first reported by Reuters, indicates that the $35 billion all-stock deal will now be able to move forward more quickly.
Last month, we reported that the deadline had been pushed back to Q1 2022 and that Chinese regulators were scrutinizing any anti-monopolistic requirements that might be imposed before approval.
The agreement will be allowed if AMD and Xilinx do not impose or discriminate against customers who purchase specific products, according to China’s State Administration for Market Regulation (SAMR).
The requirements that AMD must adhere to for the Xilinx acquisition to be approved are listed in the table below. SAMR imposes five major responsibilities:
Obligation to be agreed by AMD
- There must be no tie ins between AMD CPUs and Xilinx FPGAs – so customers can buy into one or the other individually, without discrimination
- AMD and Xilinx hardware and software must continue to be sold in China based on the principles of fairness, reasonableness, and non-discrimination
- Xilinx FPGA flexibility and programmability must continue to support Arm processors, and it continues with pre-deal plans
- AMD CPUs and Xilinx FPGA supplies must continue to flow as before the deal and AMD must not discriminate against rival CPU and GPU tech (in terms of features and interoperability) in new FPGAs
- Third-party CPU. GPU and FPGA information must be safeguarded and held on separate and distinct systems to those used by AMD staff.
Because the above table is based on a machine-translated SAMR news item, there’s a chance the obligation column will be misinterpreted. However, we can conclude that China wants the merged entity to operate in the same manner as before the merger. This means that sales of the respective parts will continue in China without any restrictions on bundling. Furthermore, it emphasizes that AMD does not impede or obstruct Xilinx’s future development of other CPU and GPU architectures in any way.
SAMR will closely monitor the merged firm through the prism of China’s anti-monopoly regulations, and AMD must accept the legally binding terms laid down by SAMR.
Investors should warmly embrace AMD’s acquisition of Xilinx, as it may help AMD compete more effectively in the data center sector, to name one major business segment. However, AMD investors (who haven’t had the best couple of months) appear to have priced in the clearance of the China market regulator, as the share price hasn’t moved in pre-market trading.
AMD has also weighed in on the developments, saying:
We continue making good progress on the required regulatory approvals to close our transaction. While we had previously expected that we would secure all approvals by the end of 2021, we have not yet completed the process and we now expect the transaction to close in the first quarter of 2022. Our conversations with regulators continue to progress productively, and we expect to secure all required approvals.
There are no additional charges to the previously announced terms or plans regarding the transaction and the companies continue to look forward to the proposed combination creating the industry’s high-performance and adaptive computing leader.
The company also filed an 8K, saying, “AMD and Xilinx currently anticipate that the closing of the Merger will occur in the first quarter of 2022, subject to the expiration of the waiting period under the HSR Act and the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions outlined in the Merger Agreement that by their nature are to be satisfied at the closing of the Merger.”
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