On February 14, AMD announced the completion of the acquisition of Xilinx in an all-stock transaction.

Following the acquisition, Xilinx shareholders will receive 1.7234 shares of AMD common stock for each share of Xilinx common stock, and Xilinx common stock will no longer be traded on the Nasdaq stock market.

  The acquisition was announced on October 27, 2020, and AMD will acquire Xilinx in an all-stock transaction valued at a total of $35 billion.

According to the current value of the stock transaction between the two parties, the acquisition amount is expected to reach 50 billion US dollars.

AMD will also become a chip manufacturer in the global market that can provide three products of CPU, GPU and FPGA at the same time.

  Former Xilinx CEO Victor Peng will join AMD as president of the newly formed Adaptive and Embedded Computing Group (AECG).

  From the perspective of the industry, the end of this merger also means that the global semiconductor giant mergers and acquisitions will come to an end. Strict regulatory review of the merger of global chip manufacturers and the slowdown of the semiconductor growth cycle will make more giants turn to the "capture" market small and medium-sized chip companies.

Post-merger still takes time to integrate

  Under the leadership of CEO Su Zifeng, who took over in 2014, AMD has turned around in the past few years, grabbing more share from longtime rival Intel.

  According to data released by research firm Mercury Research, in the fourth quarter of 2021, AMD's processor market share has reached a record high of 25.6%, including custom chips for game consoles and IoT semiconductors.

Although Intel's chips still dominate the market, they no longer have the technological advantages they once had.

  And AMD's market share improvement is inseparable from a past decision to outsource chip manufacturing to TSMC.

Unlike Intel's 10nm difficulties in recent years, TSMC, which only does chip foundry, has already shipped 5nm products on a large scale.

  Technology leadership has also won more customers for AMD.

Starting in Q3 2020, Microsoft Azure deploys AMD products to 18 regions and 9 Availability Zones, and launches new data analytics services powered by second-generation EPYC processors; Amazon launches multiple new high-performance AMD Case, while Google announced the general availability of its Cloud Confidential Virtual Machine, powered exclusively by second-generation EPYC processors.

  But to gain a larger share in the era of data "oil", AMD also needs to seek more business opportunities.

  "If AMD wants to compete with Intel or Nvidia, it must make some acquisitions." An industry insider told reporters, "Now AMD's competitiveness in many markets by relying on CPU and GPU is relatively limited, especially in some applications of AI. So It is also reasonable for AMD to acquire Xilinx, because Xilinx has been very active in the inference side of AI in recent years, and Xilinx has a good performance in 5G networks, industrial automation, autonomous driving and other fields, which can expand AMD's business."

  In addition, as a leader in FPGAs, Xilinx's commercial value has also emerged in the past few years.

  FPGA is a product of further development on the basis of programmable devices such as PAL and GAL.

It appears as a semi-custom circuit in the field of application-specific integrated circuits, which not only solves the shortcomings of custom circuits, but also overcomes the shortcomings of the limited number of original programmable device gate circuits.

Major global players include Xilinx, Altera, Lattice (Lattice) and Microsemi (Microsemi).

Even when chip giants such as Intel design CPU and other chips, they will first simulate on Xilinx's FPGA before tape-out.

  In the latest statement, Su Zifeng said on the above acquisition, "Xilinx's leading FPGA, adaptive SoC, artificial intelligence engine and software expertise will empower AMD to bring super high performance and adaptive computing. solutions portfolio and help us capture a larger share of the foreseeable approximately $135 billion cloud, edge and smart device market opportunity."

  However, some industry organizations believe that it is not easy for AMD to integrate after acquiring Xilinx to achieve the effect of 1+1 greater than 2.

  TrendForce believes that after the merger between the two parties, whether it is product positioning, R&D resource allocation, and integration of development tools and software libraries, synergies can only be achieved through the communication and discussion of existing personnel.

Among them, the integration of software resources such as development tools and software libraries is quite difficult, and the characteristics of CPU, GPU and FPGA must be taken into account. Therefore, AMD will face considerable challenges to achieve this goal.

Is the mega-merger wave coming to an end?

  After the merger of Xilinx, AMD has become another super-large semiconductor manufacturer with three product lines of CPU, GPU and FPGA after Intel, and directly competes with NVIDIA and Intel in the field of data centers.

  But from the perspective of the industry, the end of this merger means that the global semiconductor giant merger wave will come to an end.

  A semiconductor analyst in Taiwan told reporters that in recent years, global trade frictions have escalated, countries have launched strategies to protect local technologies, and regulatory scrutiny of mergers of chip manufacturers has become increasingly stringent. In this context, global giant acquisitions will be greatly affected.

In addition, the reason for the decrease in mergers and acquisitions, on the other hand, is that the process of mergers and acquisitions is very expensive and lasts for a long time.

  It can be seen that on February 8, Nvidia officially terminated its $66 billion acquisition of chip design company ARM, thus ending an 18-month regulatory review process.

During the review phase, the acquisition faced opposition from Qualcomm, Google, Microsoft and others over concerns that Nvidia would prevent other chipmakers from continuing to use ARM's technology.

  In addition, recession fears in the semiconductor market also weighed on the pace of mega-investment.

  According to data from consulting firm IC Insights, after the epidemic stabilized, the value of semiconductor mergers and acquisitions in 2020 jumped to $117.9 billion, setting an all-time high annual record. From September to December 2020 alone, the total value of semiconductor mergers and acquisitions reached 945 One hundred million U.S. dollars.

But the trend continued into the first half of 2021, before slowing down.

Between January and August last year, the total value of mergers and acquisitions in the semiconductor industry reached $22 billion, of which $16.2 billion in the second quarter was down from $15.8 billion in the first quarter.

  IDC predicts that the semiconductor industry will reach a balance in mid-2022, and with the large-scale expansion of production capacity starting at the end of 2022 and 2023, there may be excess capacity in 2023.

  Farewell to the scale chase, more semiconductor giants have diversified their investments and began to capture the current small and medium-sized semiconductor companies to achieve technical complementarity.

  On the 15th, it was reported that Intel is seeking to acquire Israeli chip company Tower Semiconductor for $6 billion, a deal that could be announced as early as this week.

  The above-mentioned Taiwanese analyst told reporters that in order to achieve economies of scale and reduce costs, leading companies will continue to carry out international mergers and acquisitions for the purpose of strategic integration.

At the same time, as the industry enters the post-Moore era, companies will speed up their deployment in emerging markets, and the competitive landscape in sub-sectors will be reshaped.

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