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Inventory of semiconductor mergers and acquisitions blocked by CFIUS (2016-2020)

According to foreign media reports, the Committee on Foreign Investment in the United States (CFIUS) urged President Trump to block German semiconductor maker Infineon from acquiring Cypress, a local semiconductor maker. called it a threat to U.S. national security.

On June 3, 2019, Infineon announced the acquisition of Cypress. According to the definitive agreement, Infineon will acquire Cypress for $23.85 per share in cash, with a total value of approximately $10.049 billion. Infineon hopes to provide customers with the most comprehensive product portfolio through acquisitions, connect the real and digital worlds, and open up new growth potential in the automotive, industrial and Internet of Things fields, and also hopes to increase the speed of the company’s profitable growth through acquisitions.

If the deal is blocked, it will be the sixth semiconductor acquisition blocked by CFIUS in nearly five years.

Let’s take a look at five semiconductor acquisitions blocked by CFIUS in the past five years.

1. The acquisition of Aixtron by Grand Chip Fund

On November 17, 2016, Eastern Time, the Committee on Foreign Investment in the United States (CFIUS) notified Aixtron and Fujian Grand Chip Fund that the transaction threatened the national security of the United States, and advised Aixtron and Fujian Grand Chip Fund to give up completely this deal.

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On September 16, 2016, Grand Chip Investment GmbH, a subsidiary of Grand Chip Investments registered in Frankfurt, officially announced the acquisition of all American depositary shares of Aixtron by way of public offer.

2. Infineon’s acquisition of Swift Wolf

On February 16, 2017, Cree officially issued a statement to terminate the acquisition agreement of Swift Wolf signed with Infineon. It is reported that the reason for the termination is also because it is considered by the U.S. government as a possible threat to its national defense and security.

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On July 14, 2016, Infineon and Cree announced that they had signed a definitive agreement, whereby Infineon acquired Wolfspeed, a wholly-owned subsidiary of Cree, for a total purchase price of approximately US$850 million.

Infineon sees Wolf’s Silicon Carbide Power (SiC Power) and Gallium Nitride RF (GaN RF) solution products as a way to strengthen the company’s business After the acquisition, Infineon is expected to become the global leader in Silicon Carbide and Gallium Nitride. largest semiconductor company.

The predecessor of Wolfspeed was Cree’s power and radio frequency business unit. In 2015, Cree adjusted the company’s development strategy and split the power and radio frequency business to form Wolfspeed. Cree originally split off the power and radio frequency business to make Jilang listed. However, due to the obstruction of the listing, a deal was reached with Infineon in 2016.

Because the devices produced by Swift Wolf are used in sensitive fields such as U.S. defense industry, high-power industrial equipment and millimeter wave communications. The military project partners that Jilang participated in include Lockheed Martin and KCB Solutions.

3. Canyon Bridge’s acquisition of Lattice

On September 14, 2017, CFIUS issued a statement saying that US President Trump issued an executive order to stop Canyon Bridge Fund Partners’ acquisition of US FPGA chip maker Lattice ( Lattice), Trump ordered the buyer and seller to complete all necessary steps within the next 30 days to completely and permanently abandon the acquisition. The reason is that Canyon Bridge has a Chinese background.

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On April 8, 2016, Canyon Bridge offered to acquire Lattice.

On November 3, 2016, Lattice said it accepted the takeover offer, announced that it would be acquired by Canyon Bridge for $1.3 billion for all outstanding shares, including its own debt, and said the acquisition would pass regulatory review in early 2017. .

The transaction was submitted to CFIUS three times for review, but was not approved within the allotted 75 days.

On September 1, 2017, Lattice disclosed in its filing with the SEC that the parties failed to address CFIUS’ national security concerns about the transaction, CFIUS recommended refusing to approve the transaction, and the parties appealed to the President of the United States. Trump. According to the procedure, Trump must make a decision within 15 days. On September 14, 2017, both parties to the transaction ushered in a presidential executive order halting the acquisition.

4. Xinyan Investment’s acquisition of Xcerra

On February 22, 2018, U.S. semiconductor testing equipment supplier Xcerra issued a statement saying that CFIUS blocked the company’s $580 million sale to Xinyan Investment.

(On October 1, 2018, Cohu announced the completion of the acquisition of Xcerra for a total consideration of $796 million.)

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On April 7, 2017, Zhongqing Xinxin and Xcerra signed a merger agreement.

On August 4, 2017, Zhongqing Xinxin transferred all the rights and obligations under the acquisition agreement and related financing documents to Xinyan Investment.

On October 13, 2017, Xcerra issued a statement saying that it agreed to Xinyan Investment to acquire Xcerra at a negotiated purchase price of US$10.25 per share. But it is still seeking CFIUS approval for the transaction.

5. Broadcom’s acquisition of Qualcomm

On March 12, 2018, Trump issued an order prohibiting Broadcom from acquiring Qualcomm as originally planned, citing national security grounds, and prohibiting Qualcomm and Broadcom from any plans that are “essentially equivalent” to a merger transaction.

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In November 2017, Broadcom threw $130 billion to acquire Qualcomm. In order to complete the transaction, Broadcom will also move its headquarters from Singapore back to the United States.

Worried about CFIUS blocking, Fairchild rejects China Resources takeover offer

On February 16, 2016, Fairchild Semiconductor said it had rejected a takeover offer jointly made by China Resources Microelectronics and Qingxin Huachuang, citing concerns that U.S. regulators might refuse to approve the transaction, citing national security concerns.

On December 9, 2015, a consortium composed of China Resources Group and China Creation offered about US$2.5 billion in cash to bid for Fairchild Semiconductor, and competed with ONSemi; on December 14, Fairchild rejected China Resources Group’s offer on the grounds that After the evaluation, its board of directors believed that it was not more favorable than the conditions proposed by ON Semiconductor; the offer was reopened on December 30; it was announced on February 16, 2016 that the board of directors of Fairchild Semiconductor was in consultation with legal and financial advisors. Following consultations, a takeover offer by a Chinese consortium led by China Resources Microelectronics Co., Ltd. and Huachuang Investment has been rejected.

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