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German regulators nix Taiwanese titan GlobalWafers' acquisition of Siltronic
China's slow signoff didn't help matters one bit
A deal that would have brought a German silicon wafer manufacturer under Taiwanese control has been scuppered by German regulators – with help from China.
The deal, announced in September 2020, would have seen Taiwan's GlobalWafers combine with Germany's Siltronic. Around $5 billion was to change hands – the sale price representing a 48 per cent premium for Siltronic shareholders. GlobalWafer holds around a third of the global market and the deal would have made it the world's second-largest player.
As is nearly always the case with foreign takeovers, the deal required signoff from German regulators, who moved … slowly.
In October 2021 Siltronic warned that regulators were yet to decide to allow the transaction. On January 14, 2022, Siltronic warned that German regulators had offered no information on when they might clear the deal, or the conditions under which they would do so. A mitigation deal had been discussed, but the Federal Ministry for Economic Affairs and Climate Action hadn't indicated its opinion of that offer.
On January 22, some good news emerged: China offered conditional approval for the deal – if GlobalWafers sold one of its Danish operations.
But that wasn't enough for the Ministry, which did not decide to approve the deal by a January 31 deadline. Time therefore expired on the deal struck by the companies. The offer to combine Siltronic and GlobalWafer remains open, but the conditions of the offer were not met.
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The Ministry is willing to review the deal again, if the parties go back to the starting line.
GlobalWafers chair and CEO Doris Hsu described the outcome as "very disappointing."
"We will certainly continue to work closely with our European customers, many of which supported the proposed transaction. We will analyze the non-decision of the German Government and consider its impact on our future investment strategy," said a canned statement from the company.
Which is where things get interesting. Because Germany is all-in on Europe's plans to invest in local silicon production capabilities and reduce dependence on offshore suppliers. The Siltronic/GlobalWafers deal could have brought expertise and capital to the European Union to help with that goal. Indeed, GlobalWafers' expertise will still be valued in Europe and the Taiwanese company won't have to divest its Danish facility.
China, meanwhile, has less formidable foes to face. As does Japanese company Shin-Etsu, the market leader. ®