​Infineon's Bid for Cypress Semiconductor Greenlit By US Treasury

Stephen L Kanaval  |

Source: Cypress Semiconductor

After reportedly being in trouble of clearing the national security review by the Committee on Foreign Investment in the United States (CFIUS), Infineon’s $10 billion takeover of Cypress Semiconductor Corp raised no concerns. CFIUS, a body led by the U.S. Treasury, informed Cypress that it had determined “there are no unresolved national security concerns” with the merger, according to a statement released by Cypress.

The deal still needs approval from China’s State Administration for Market Regulation (SAMR) and other customary closing conditions under the merger agreement. Munich-based Infineon believes the acquisition of Cypress will open additional “growth potential” in the automotive and Internet of Things sectors.

In the initial announcement in June 2019, automotive synergies were a key focus of leadership. Cypress sells a majority of its chips to automotive and IoT (Internet of Things) customers, which accounted for 39% and 40% of its revenue last quarter. The remaining 21% came from sales of legacy chips for slower-growth markets like consumer electronics. Infineon said it would create an automotive leader with a 13% market share.

“Cypress has a differentiated portfolio of microcontrollers as well as software and connectivity components that are highly complementary to Infineon’s leading power semiconductors, sensors and security solutions. Combining these technology assets will enable comprehensive, advanced solutions for high-growth applications such as electric drives, battery-powered devices and power supplies,” the June 2, 2019, press release details.

Analysts at Metzler, speaking to Bloomberg, said that clearing CFIUS was the most critical hurdle for the deal.

Under the current administration, these cross border transactions have come under significant scrutiny, particularly when China is in the mix. Infineon gets one-third of its revenue from China, according to Bloomberg.

Cypress shares surged 45% to $22.27 in after-hours U.S. trading on Monday. At the time of post, Infineon shares were up 7.35% in afternoon trading.

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