Proposed Acquisition by Advanced Micro Devices, Inc. of Xilinx, Inc.

Reference:

CCCS/400/140/2021/003

Notifying Party:

Advanced Micro Devices, Inc.

Notifying Date:

23 March 2021

Summary of Transaction:

(i) the names of the merger parties;

(a) Advanced Micro Devices, Inc. (“AMD”)

(b) Xilinx, Inc. (“Xilinx”)

collectively, the (“Parties”).

(ii) a description of the transaction;

The notification relates to the proposed acquisition by AMD of Xilinx in an all-stock transaction (the “Proposed Transaction”).

(iii) a description of the business activities of the merger parties worldwide and in Singapore;

AMD

AMD is a global semiconductor company that is active primarily in the supply of central processing units (“CPUs”), also known as microprocessors, based on the x86 instruction set, and graphic processing units (“GPUs”). AMD also offers accelerated processing units (“APUs”) that combine a CPU with a GPU on one chip, and semi-custom System-on-Chip (“SoC”) products, that are designed primarily for the gaming console market and include together both CPUs, GPUs.

AMD offers all products globally, including to customers in Singapore.

Xilinx

Xilinx is a global semiconductor company that primarily designs and supplies field programmable gate arrays (“FPGAs”) that customers program to perform desired logic functions, as well as programmable FPGA-based SoCs, which combine processor-based systems with Xilinx FPGAs in a single device. Xilinx designs and develops FPGAs, FPGA-based SoCs, Adaptive Compute Acceleration Platform (“ACAP”), a fully software-programmable, multi-core heterogeneous compute platform, and Smart Network Interface Cards (“SmartNICs”).

In addition to its programmable platforms, Xilinx provides design services, customer training, field engineering, and technical support.

Xilinx offers all products globally, including to customers in Singapore.

(iv) a description of the overlapping goods or services, including brand names;

Both AMD and Xilinx are active in the supply of semiconductor technology, but each has a distinct focus and offering. AMD submits that, as the Parties’ activities are entirely complementary, the Proposed Transaction does not give rise to any horizontal overlaps nor vertical relationships.

(v) a description of substitute goods or services;

AMD submits that the Parties do not offer any overlapping goods or services.

(vi) the applicant’s views on:

a. definition of the relevant market(s);

b. the way in which competition functions in this market;

c. barriers to entry and countervailing buyer power; and

d. the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

AMD submits that the Parties do not offer any overlapping goods or services. Accordingly, there are no applicable relevant markets in relation to the Proposed Transaction. AMD’s CPUs and Xilinx’s FPGAs perform complementary functions in data centres and can be purchased by the same set of customers. However, AMD submits that this association does not give rise to any competition concerns.

Nature of competition for the supply of CPUs and FPGAs in data centres (no conglomerate effects or advantage arising from broad range of products)

AMD submits that the main factors for product differentiation for CPUs and FPGAs which suppliers compete on are price, functionality, performance, and power consumption. In general, however, there is strong interchangeability among CPUs and FPGAs from different suppliers within the data centre space. As data centre customers purchase each product based on how the product’s specification meets its needs and budget, a supplier need not offer a broad range of data centre products across various categories in order to compete effectively against other suppliers.

Barriers to entry and countervailing power

AMD submits that there are no significant factors that serve as barriers to entry for any of the products or services the Parties sell, including CPUs and FPGAs for data centres, either in Singapore or globally.

AMD also submits that customers of AMD and Xilinx have strong countervailing buyer power, given that the customer bases of both Parties are concentrated and consist of a number of large global customers. To AMD’s knowledge, customers are able to switch, and have switched, between suppliers easily in relation to both the supply of CPUs and FPGAs for data centres, and there are no prohibitive costs and time involved in such switching. The ability of customers to exert strong countervailing power and the low switching costs faced by customers would constrain the merged entity post- Proposed Transaction.

Non-coordinated effects

AMD submits that non-coordinated effects will not arise as a result of the Proposed Transaction, globally or in Singapore. The Proposed Transaction does not give rise to any horizontal overlaps between the Parties – AMD is active in CPU and GPUs, while Xilinx is active in FPGAs. Moreover, AMD faces strong competition from other competitors with larger market shares in the markets for CPUs and GPUs respectively. Significant competitive constraint from other large competitors will continue post-Proposed Transaction in relation to both the supply of CPUs and FPGAs in data centres.

Coordinated effects

AMD submits that the Proposed Transaction will not give rise to coordinated effects, as the Parties do not offer any overlapping goods or services. The lack of horizontal overlaps between the Parties entails the structure of the industry would remain unaffected by the Proposed Transaction, such that there will not arise any change in the markets to incentivise coordination of behaviour by other market players. Furthermore:

a. suppliers of semiconductor products, including CPUs and FPGAs for data centres, compete on the basis of product differentiation and are constantly innovating to offer new and improved products in the market. Given the nature of competition, suppliers would not be incentivised to coordinate with each other; and

b. strong countervailing power from large customers and the low costs of switching suppliers faced by customers facilitates the process of switching between different suppliers in response to price changes or any other reason.

Vertical effects

AMD submits that there are no existing or potential vertical relationships between the Parties.

Decision:

Following its assessment, CCCS has concluded that the Proposed Transaction, if carried into effect, will not infringe the section 54 prohibition of the Competition Act (Cap. 50B).

Decision Date:

30 August 2021

Read the media release.

The Grounds of Decision will be made available in due course.