Increased Scrutiny, Cost Stymie Chip Industry Deals

Article By : Nitin Dahad

As semiconductors become critical for national economies, chip industry deals will face more public and regulatory scrutiny.

There was a time when what happened in the chip industry stayed within the industry. With greater recognition of the role of semiconductors by consumers and regulators alike, we’ve increasingly seen how big mergers and acquisitions attract greater antitrust scrutiny. In parallel, we also hear more from government officials about about semiconductor sovereignty, protecting supply chains and self-sufficiency in the production of chips and components.

A quick scan of technology news this month alone reveals an electronics sector abuzz with proposed mergers, acquisitions and of course efforts aimed at IC independence.

Case in point, the first phase of the U.K. competition regulator’s report on Nvidia’s proposed acquisition of Arm. While the report doesn’t disclose who said what among among those filing comments with the agency, the general tone reflects what I’ve been hearing from various players interviewed since the news of the deal first broke.

Comments cited in the U.K. report confirm one thing: Arm is a key vendor of intellectual property upon which the chip industry relies, with an ecosystem significantly more advanced than anything offered by competing technologies (the report specifically mentions RISC-V and MIPS). U.K. regulators warned the deal for Arm could potentially restrict access to “openly” available IP.

The U.K. Competition and Markets Authority (CMA) also said last week it would consider intervening in the acquisition of Ultra Electronics by Cobham Ultra Acquisitions, a wholly-owned subsidiary of Cobham Group, which in turn is owned by U.S. private equity investor Advent International. CMA is investigating the proposed £2.6 billion ($3.57 billion) acquisition on national security grounds. The agency will issue its report on the deal by mid-January 2022. Ultra Electronics provides mission-critical electronics for the military, aerospace, nuclear and industrial sensors markets.

Meanwhile, the acquisition of Newport Wafer Fab by Nexperia appeared to be a done deal last month, with Nexperia announcing full ownership and plans to brand the new unit Nexperia Newport. Nexperia owner Wingtech has since published a note inferring possible U.K. government review of the deal, citing “domestic and foreign industrial policies.”

Newport’s fab established in 1982 has a current capacity of more than 35,000 200 mm wafer starts per month, covering a wide range of semiconductor technologies ranging from MOSFETs and trench IGBTs using wafer-thinning methods to CMOS, analog and compound semiconductors. Nexperia has said Newport’s wafer fab would support its IGBT, analog and compound semiconductor product lines in parallel with current investments at its Manchester and Hamburg wafer fabs.

Other pending chip deals suffer from sticker shock. A report this week suggests acquisitive Samsung may be reconsidering its interest in NXP Semiconductors, citing cost.

Korea Times reported Samsung may be shifting its stance, citing an unnamed executive as saying, “NXP Semiconductors is becoming expensive.” The report also infers that Samsung is wary of a potential antitrust review, citing the proposed Nvidia-Arm deal as an example.

Persistent calls for semiconductor sovereignty also play a role. During a recent Indian industry meeting last month, the chairman of the Tata Group indicated it has established a unit to consider domestic semiconductor manufacturing. Such initiatives have been floated in the past. A fruitless search of Tata Group’s web site indicates the proposal remains aspirational.

Still, Indian media jumped on the proposal, prompting an open letter from Britto Edward Victor, who heads the office of strategy management at Rohm Semiconductor in Bangalore. It stressed exorbitant startup costs plus the time required to create a supplier ecosystem.

Some chip deals are advancing. Last week, Renesas announced progress toward its proposed acquisition of Dialog Semiconductor after Taiwan’s Fair Trade Commission waived its jurisdiction to review the all-cash deal. With clearances already issued in China, Germany and the United States, Renesas said it expects to close the Dialog deal by the end of August.

As semiconductor technology is increasingly seen as strategic, future chip deals are likely to attract scrutiny on antitrust and national security grounds. Meanwhile, chip makers will be seeking more tax breaks to expand domestic fab capacity as semiconductor sovereignty becomes a key tenet of national technology policies.

This article was originally published on EE Times.

Nitin Dahad is a correspondent for EE Times, EE Times Europe and also Editor-in-Chief of With 35 years in the electronics industry, he’s had many different roles: from engineer to journalist, and from entrepreneur to startup mentor and government advisor. He was part of the startup team that launched 32-bit microprocessor company ARC International in the US in the late 1990s and took it public, and co-founder of The Chilli, which influenced much of the tech startup scene in the early 2000s. He’s also worked with many of the big names—including National Semiconductor, GEC Plessey Semiconductors, Dialog Semiconductor and Marconi Instruments.


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