German regulators blocked a $5 billion takeover of a rival wafer company

2022-05-23 0 By

Germany’s economy ministry on Monday failed to approve the 4.35 billion euro ($5 billion) acquisition of Siltronic by silicon wafer giant GlobalWafers, meaning the deal cannot go ahead as planned.Siltronic is a Silicon wafer manufacturer based in Munich, Germany.A takeover by Global Wafer would create the world’s second-largest 300mm wafer maker, behind Japan’s Shin-Etsu.However, the ring wafer failed to obtain the approval of the German government on January 31.”During the review process, Global Wafer made extremely long-term compensation measures and commitments to the German government and has repeatedly expressed its willingness to discuss alternatives with the German government,” the company said in a filing.”Despite global Wafer’s efforts to reach a mutually agreeable solution and its long and successful track record in Europe, Global Wafer regrets this outcome.Global Wafer will continue to work closely with its customers in Europe, including many who supported the acquisition.”Global wafer is also liable to pay Sitronic a termination fee of eur50 million.”As part of an investment review, it is not possible to complete all the necessary vetting steps in such a short time,” said a spokesman for the German economy ministry.CNBC, an American business media, attributed the failure of the deal to the fact that countries are strengthening their “technological sovereignty” at a time when they want to get rid of their dependence on other countries for key technologies such as semiconductors.Europe is heavily dependent on the US and Asia, home to industrial behemoths such as Samsung, TSMC and Intel.Since 2016, Germany and the EU have become concerned about their “erosion of tech leadership,” Abishur Prakash, co-founder of consulting firm Center for Innovating the Future, told the media.European governments have taken a different approach to their chip companies, Prakash added. “Having a self-sustaining European chip industry is key. Whatever the EU’s future goals, from robotics to space to the quantum realm, the EU needs advanced semiconductors and it does not want to be beholden to other countries in this area.”Germany, home to chipmakers such as Infineon, has become increasingly wary of the global supply chain for semiconductors after a worldwide chip shortage hurt its auto industry.Germany’s economics ministry said it would conduct another investment review if Global Wafer chose to make a new acquisition attempt.Other chip-related mergers and acquisitions are also being investigated by governments and regulators.The most notable was Nvidia’s $40bn acquisition of British chip designer Arm, which is owned by Japan’s SoftBank.Critics worry that Nvidia could limit Arm’s business and lead to global price increases, while reducing industry innovation.But Nvidia argued that the deal would lead to more innovation and that Arm would not only remain independent but also benefit from its investment.