Market participants are re-evaluating the global chip manufacturing supply base after the collapse of two major potential acquisitions — Japanese investment consortium Softbank's sale of UK-based Arm to US tech giant Nvidia, and the planned takeover of German chip manufacturer Siltronic by Taiwan's GlobalWafers.
Nvidia's acquisition of Arm has been abandoned because of "significant regulatory challenges" and "despite good faith by the parties", Softbank said today. Nvidia and Arm still plan to "partner closely", with Nvidia's founder and chief executive Jensen Huang saying today that they will remain a "proud licensee" of the UK-based chip designer.
Nvidia's proposal to acquire Arm, announced in 2020, was controversial from the start, with many market participants and industry figures voicing concerns about competition and limitations on Arm's activities post-acquisition.
Headquartered in Cambridge, Arm has grown to be one of the world's largest chip designers, adopting a licensing model in the mid-1990s that has enabled it to work with manufacturers around the world as appetite for chips surges and technologies become more sophisticated.
Its acquisition by Softbank in 2016 was considered controversial as well, and some observers speculated that the UK government might have put up more resistance if they had more legal tools at their disposal. On 4 January 2022, the UK's new National Security and Investment Act came into force, giving the government powers to intervene in the acquisition of companies with strategic national importance. It was referenced last year in regard to Chinese-owned Nexperia's acquisition of the UK's largest chip plant, in Newport, but was still only a bill at that stage and there was no firm indication that the government would consider invoking it on that occasion.
The collapse of the Nvidia-Arm deal comes just days after Taiwan's GlobalWafers confirmed that the German government has not approved its acquisition of Munich-based Siltronic. "We have not been able to obtain the approval from the German government before the long stop date [of 31 January]," GlobalWafers' chief executive and chairperson, Doris Hsu, said on 1 February. "We will certainly continue to work closely with our European customers, many of which supported the proposed transaction. We will analyse the [decision] and consider its impact on our future investment strategy." GlobalWafers already has a 13.67pc shareholding in Siltronic.
On 6 February, GlobalWafers announced that funds originally earmarked for the Siltronic acquisition will now be put toward a $3.6bn capacity expansion in 2022-24. This includes brownfield and greenfield investments across Asia, Europe and the US. The new production lines are due to ramp up in the second half of 2023 and then expand on a quarterly basis. "GlobalWafers shall focus on strengthening its growth by building new production lines, which specialise in next-generation products for advanced processes targeting large-size wafers and compound semiconductors," the company said.
