China’s antitrust authority has reportedly slowed down its reviews of several transactions involving acquisitions by US technology companies as the trade relationship between the world’s two largest economies remains strained.
The Wall Street Journal reported on Tuesday that China’s State Administration for Market Regulation is holding back approval on Intel’s proposed acquisition of Israeli chipmaker Tower Semiconductor and MaxLinear’s proposed purchase of Taiwan-based Silicon Motion Technology.
The SAMR wants the merging companies to make their products available in China on fair and non-discriminatory terms, according to the media outlet, which is the general approach the Chinese agency has taken toward global deals in recent years.
But such remedies might put US companies in a difficult position, given the increasing restrictions on exports to China, as well as expanding production in the country. This week, China asked the World Trade Organization to review chip export restrictions imposed by the US, Japan and the Netherlands.
Trade tensions between the US and China came to a head during the Trump administration, but they have once again become tense under President Joe Biden’s leadership.
In 2019, a lawyer speaking to GCR on condition of anonymity said many practitioners in China believed that the government was using the country’s merger regime as a means to counter US trade pressure, citing the collapse of Qualcomm/NXP and other semiconductor deals. The WSJ report suggests that the SAMR is continuing to employ this tactic.
Intel reached an agreement to buy Tower Semiconductor for €5 billion in February 2022, while MaxLinear agreed to a €3.5 billion price tag for Silicon Motion three months later.
Intel, MaxLinear and the SAMR were contacted for comment.
Christoph van Opstal, a counsel at Fangda Partners in Hong Kong, said the SAMR’s mandate to protect competition “is generally accepted to be broader than the goals of other competition agencies”. Other jurisdictions rely more heavily on foreign investment screening mechanisms, “which have increasingly targeted and prohibited Chinese investments”, he added.
As a result of increasing trade tensions and export control restrictions directed at China, the key issues and potential remedies in deal reviews are not necessarily merger-specific or limited to competition issues, van Opstal said.
He noted that merging companies are increasingly forced to review and provide details of their product supply architecture during reviews and propose creative solutions to address supply security issues, including facilitating the entry of local rivals or guaranteeing the continuous supply of other products.
Counsel to Intel
Linklaters
Skadden Arps Slate Meagher & Flom
