A merger case of Winbond Electronics Corp. and National Semiconductor Corp.

Chinese Taipei

Case:

A merger case of Winbond Electronics Corp. and National Semiconductor Corp.

Key Words:

semiconductor, merger

Reference:

Fair Trade Commission Decision of April 21, 2005 (the 702nd Commissioners' Meeting)

Industry:

Semiconductors Manufacturing (2710)

Relevant Laws:

Article 6 (1) (iii), Article 11 (1) (ii) and (iii), Article 11 (3) , and Article 12 (1) of the Fair Trade Law

Summary:

1. Winbond Electronics Corp. (hereinafter referred to as Winbond Electronics), in order to enhance the development of notebook’s Input/Output controller and to expand the development of built-in keyboard controller, so as to provide clients a wider range and more sophisticated product line, and National Semiconductor Corporation, NSC (hereinafter referred to as National Semiconductor), in order to focus on managing its core analog IC portfolio, both parties have signed an assets acquisition agreement on March 14, 2005 for the sales and purchase of assets and operations of Advanced PC Business division of National Semiconductor. The parties participating in the merger thereof in accordance with Article 6 (1) (iii), Article 11 (1) (ii) and (iii) of the Fair Trade Law, file a merger application and the related enclosures with the Fair Trade Commission.
   
2. Winbond Electronics in this case is assigned by National Semiconductor of its Advanced PC Business division, including but not limited to all fixed assets and business of National Semiconductor’s NSC-Israel, this combination falls under the definition of merger as stipulated in Article 6 (1) (iii) of the Fair Trade Law, that is “where an enterprise is assigned by or leases from another enterprise the whole or the major part of the business or properties of such other enterprise”. In addition , as indicated in the application form, Winbond Electronics has 27.92% market share in computers’ Input/Output controller (including desktop, notebook and server) that meets the threshold of filing application for merger as stipulated in Article 11 (1) (ii) of the Fair Trade Law. Furthermore, the annual sales of Winbond Electronics and National Semiconductors for the year of 2004 are NTD32,140.14 million and NTD 3,813.02 million (calculated at an exchange rate of USD1 to NTD31) respectfully, both have met the threshold of filing application for merger as stipulated in Article 11 (1) (iii) of the Fair Trade Law, that is, any merger that the total sales for the preceding fiscal year of one of the enterprises in the merger exceeds the threshold amount publicly announced by the Fair Trade Commission shall be filed with the Fair Trade Commission. Thus, this merger must be filed with the Fair Trade Commission.
   
3. As a result of this merger, Winbond Electronics will acquire the research and development capabilities of National Semiconductors in notebook’s and server’s Input/Output controllers and built-in keyboard controller. Also, the clients will have wider range of product selections. Furthermore, if the local companies, that have originally bought the related products from National Semiconductors, choose to buy from Winbond Electronics in the future, then, the revenue of Winbond Electronics and the growth of domestic economic shall actually be benefited. Also, no restrictions in law are found for the relevant market of this merger, neither patent nor intellectual property right has constituted entry barriers, there are many competitors in domestic IC market, other IC manufacturers only need small amount of capital for entering into the product markets related to this merger (Input/Output controller for computer and built-in keyboard controller), the enterprise files the report of merger is unable to exclude other enterprises from entering into market. Moreover, after the merger, the market shares of Winbond Electronics in Input/Output controller for computer and built-in keyboard controller will increase from 27.92% to 32.33% and from 6% to 15% respectively. In consideration of the enterprise participating in the merger has applied Input/Output controller for computer in different areas of its products and furthermore the sales volume of built-in keyboard controller is relatively small, the market is still at the introduction stage. Also, there are highly competitive competitors participate in the competition, therefore, this merger does not pose significant negative impact on the present overall market situation and the extent of competition as well as the disadvantage of competition restraint is insignificant. Hence, in accordance with the provision of Article 12 (1) of the Fair Trade Law, this merger is not prohibited. In addition, this merger case is scheduled to be completed in the middle of April, but the enterprise filing the merger has requested the Fair Trade Commission to shorten the 30 day waiting period on the ground that there is a time validity for this merger.Therefore, in accordance with the proviso of Article 11 (3) of the Fair Trade Law, a written notification of shortening waiting period shall be issued to the filing enterprise.

Summarized by Chen, Shu-Hua;
Supervised by Liou, Chi-Jung

Appendix:

Winbond Electronics Corp.’s Uniform Invoice Number: 22099218
National Semiconductor Corp.’s Uniform Invoice Number: Nil