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Taiwan’s GlobalWafers in talks to buy German peer for USD 4.5 billion

Written by Nikkei Asia Published on     2 mins read

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Acquisition aimed at taking on Japanese giants in key chipmaking sector.

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 EUR 125 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 EUR 3.75 billion (USD 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 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.

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 added that the deal should not encounter very high regulatory hurdles.

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

This article first appeared on Nikkei Asia. It’s republished here as part of 36Kr’s ongoing partnership with Nikkei.

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