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Technology

Taiwan's GlobalWafers in talks to buy German peer for $4.5bn

Acquisition aimed at taking on Japanese giants in key chipmaking sector

GlobalWafers' acquisition of Siltronic of Germany would put the Taiwanese chip wafer maker in the No. 2 spot globally.  (Photos by Takaki Kashiwabara)

TAIPEI -- Taiwan's GlobalWafers, the world's third-largest maker of semiconductor wafers, said on Monday that it is in final talks to acquire German peer Siltronic AG, in a bid to expand its market share and challenge leading Japanese players.

GlobalWafers plans to launch a voluntary tender offer of 125 euros per share to Siltronic's shareholders and the two companies aim to sign a "business combination agreement" in the second week of December, company spokesperson William Chen said at a press conference early Monday.

The deal could be worth up to 3.75 billion euros ($4.5 billion) if GlobalWafers buys all of Siltronic's outstanding shares. The German company is the world's No. 4 wafer material maker, just behind Shin-Etsu Chemical and Sumco, both of Japan, and GlobalWafers.

Wafers are the substrate material on which chips are fabricated.

"A combination of GlobalWafers and Siltronic would create a leading player in the industry with a comprehensive product portfolio that can offer technologically sophisticated products to all semiconductor customers globally, and brings together two companies with complementary skills which will enable the combined business to invest more in capacity expansion," Chen said.

GlobalWafers has a global market share of around 17%, while Siltronic's was 13% in the first quarter of 2020, according to the German company. The acquisition, which will require the approval of regulators and the boards of both companies, would put the Taiwanese company in the No. 2 spot. The world's two top silicon wafer providers currently are Shin-etsu Chemical and Sumco of Japan, which control around 33% and 25% of the market, respectively.

GlobalWafers Chairman and CEO Doris Hsu said later on Monday that she expects regulators to give the deal the greenlight.

"Both GlobalWafers and Siltronic have consulted legal experts and we are cautiously hopeful that [the deal] will clear all the required regulatory reviews," she said.

Hsu did not give any details about how the two companies intend to integrate their operations. If the deal goes through, however, it would give GlobalWafers an even broader production base, something Hsu points to as one of her company's major strengths.

"In an era when all companies face geopolitical uncertainties as well as the uncertainties brought by the global pandemic, business continuity plans are very important," Hsu said. "We have a diverse production footprint and that is one of our advantages."

GlobalWafers' maintains 15 production plants across nine countries, including Taiwan, South Korea, Italy, Malaysia and the U.S. Siltronic, according to Hsu, has four plants in Germany, Singapore and the U.S.

Leading Japanese wafer makers, she added, operate fewer but larger plants to increase efficiency and bring down costs.

The takeover bid comes as the semiconductor industry is enjoying an electronics demand boom, triggered by the widespread adoption of working from home amid the coronavirus pandemic and a recovery in the smartphone and automotive industries.

GlobalWafers is a key wafer material supplier to major chip manufacturers such as Taiwan Semiconductor Manufacturing Co., Samsung Electronics and Intel.

GlobalWafers' offer price for Siltronic implies a premium of 48% to the volume-weighted average share price of the last 90 days.

Donnie Teng, a semiconductor analyst with Nomura Securities, told Nikkei Asia that the acquisition could help GlobalWafer expand its market share and supply more to European chipmakers such as Infineon, STMicroelectronics and NXP.

Teng said he did not foresee any major regulatory hurdles to the deal.

Globalwafers' shares surged the daily maximum of 10% to 558 New Taiwan dollars when trading opened in Taipei on Monday morning.

Additional reporting by Nikkei staff writer Lauly Li

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