Intel and Broadcom Postpone M&A
China's SAMR Quickly Rejects Review
Effectively Aiming to Curb US Anti-China Offensive
Recently, China has increasingly been obstructing mergers and acquisitions (M&A) by global overseas companies. This appears to be a countermeasure in response to the United States strengthening its containment of China. With imports of related equipment blocked due to U.S. semiconductor export controls, China is attempting to neutralize U.S. regulations by using M&A reviews as a weapon.
◆Global Companies Postpone M&As Due to Delays in Chinese Reviews
On the 4th (local time), The Wall Street Journal reported that semiconductor companies such as Intel and MaxLinear are facing difficulties in M&A due to delays in corporate merger reviews by Chinese authorities.
Currently, Intel has announced plans to acquire the Israeli semiconductor company 'Tower Semiconductor,' and the U.S. broadband communication chip manufacturer MaxLinear has declared its intention to acquire Taiwan's SSD controller manufacturer Silicon Motion Technology. However, these M&A plans have been hindered by Chinese authorities' reviews.
U.S. fabless semiconductor company Broadcom also planned to complete its acquisition of cloud computing company VMware in February, but due to delays in Chinese regulatory reviews, the contract deadline was extended to May 26.
Microsoft's plan to acquire the gaming company Activision Blizzard is also under long-term merger review by Chinese authorities. Microsoft requested a swift and expedited review from Chinese regulators, but the Chinese authorities refused, stating that a thorough examination process is necessary.
The semiconductor industry believes that these delays in Chinese reviews are intentional. China cited a shortage of personnel at the State Administration for Market Regulation (SAMR) as the reason for postponing reviews by several months. However, even after recently hiring additional staff, the prolonged reviews are seen as deliberate stalling. China requires companies earning more than $117 million annually to undergo antitrust reviews by SAMR when pursuing M&A.
◆China Pressures Global Companies in Response to U.S. Containment... M&A Also Serves as a Warning
A semiconductor industry insider told the WSJ, "China has requested global companies to supply semiconductor-related products to China as a condition for approving M&A," indicating that China is abusing M&A reviews to neutralize U.S. regulations.
China is currently facing restrictions on importing related items after the U.S. imposed a ban on exports of advanced semiconductors and semiconductor equipment starting last October. Furthermore, with the Netherlands and Japan joining semiconductor regulations against China, China's maneuvering space in the semiconductor market has narrowed.
As pointed out by the semiconductor industry, China is using global companies as the easiest means to counter U.S. pressure. The recent detention of employees from Japan's Astra Pharmaceutical and the search of the Beijing office of Mintz Group, a corporate investigation firm friendly to the U.S., are also seen by the WSJ as warning messages to the international community not to join the anti-China front.
The WSJ stated, "Chinese officials view M&A reviews as a relatively clever and easy way to pressure global companies and various governments," adding, "China is using tactics to pressure companies in order to fight against U.S.-led Western sanctions."
Experts predict that China is likely to continue using M&A reviews as a tool to counter the U.S. Amy Celico, senior consultant at global consulting firm Albright Stonebridge Group, said, "Since the Chinese government does not have many means to pressure foreign companies, it is expected that global companies will find it increasingly difficult to obtain China's approval related to M&A."
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