MaxLinear/Silicon Motion: Parties Make Progress in Negotiating Remedy With Chinese Regulator

Published on May 30, 2023

U.S. chipmaker MaxLinear (MXL) has achieved some progress in negotiating a remedy proposal with China’s antitrust authority for its planned $3.8 billion acquisition of Taiwanese rival Silicon Motion Technology (SIMO), sources familiar with the matter said.

Case handlers at the State Administration for Market Regulation (SAMR) recently engaged in discussions of potential remedies with representatives of MaxLinear, the sources said. The talks follow a trip a MaxLinear executive is said to have made to Beijing earlier this month. It is said the executive was MaxLinear CEO Kishore Seendripu, but a company spokesperson wouldn’t confirm that.

The details of the remedy negotiations aren’t immediately clear, although they may include a proposed behavioral fix to address downstream customers’ concerns about supply-chain security, sources said.

Last month, SAMR paused its investigation of the transaction, buying more time for the merging companies to address concerns raised by domestic semiconductor customers. MaxLinear and Silicon Motion had been unable to allay the Chinese industry fears within SAMR’s standard 180-day review timeline.

Silicon Motion is a global leader in developing NAND flash memory for solid state storage devices. The Taiwanese manufacturer accounts for about 33% to 35% of the global market for Solid State Disk (SSD) controller chips and supplies 80% of those chips to south China, according to an industry report.

Industry concerns. Some Chinese semiconductor industry players have warned that the merger could disrupt Silicon Motion’s ability to cooperate with Chinese suppliers such as Yangtze Memory Technologies (YMTC). MaxLinear, which is based in Carlsbad, California, is required to abide by tightening Biden administration export controls, and the U.S. added Yangtze, a leading memory chipmaker, in October to a list of Chinese companies targeted by the restrictions.

China-based analysts have expressed concerns that the deal, due to the restrictive U.S. trade policies, could threaten more broadly the security of supply chains that keep the country’s electronics industry humming.

Amid increasing trade protectionism and technology competition between the U.S. and China, SAMR’s decision regarding the MaxLinear/Silicon Motion deal will be closely watched to see what it might indicate about other U.S.-related deals under review, including Intel’s (INTC) proposed $5.4 billion Tower Semiconductor (TSEM) acquisition, and Broadcom’s (AVGO) $61 billion bid for VMware (VMW).

SAMR doesn’t comment on ongoing matters. Spokespeople for MaxLinear and Silicon Motion didn’t respond to requests for comment.