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© evertiq Business | September 18, 2015

EU commission approves NXP’s acquisition of Freescale

The European Commission has approved the acquisition of Freescale by NXP, subject to divestment of NXP’s radio frequency power business, where the takeover could have led to higher prices and less competition.
The approval is conditional upon NXP divesting its radio frequency power business to address the Commission's concerns that the takeover could otherwise have led to higher prices and less competition in this specific market.

The Commission found that the two companies’ semiconductor product portfolios were mostly complementary, except for RF power transistors. Due to the fact that both NXP and Frescale are two of the largest players – and close competitors – in the RF power transistor market, in particular those used in base stations for mobile telecommunications, the commission had concerns that other companies on the market would be unable to exercise sufficient competitive pressure on a merged entity. Which in turn could lead to prices rising and a reduced choice for customers.

To address these concerns, NXP offered:
  • to sell its RF power business, comprising all key assets and personnel, except assets necessary for the so-called “front-end” manufacturing of these products, that is imprinting substrate silicon wafers with the precise circuitry required for semiconductors to function;
  • a manufacturing agreement with a third party foundry to perform front-end manufacturing services for the divested business;
  • to provide the RF power business with the transitional manufacturing and services agreements required to guarantee business continuity.

These commitments remove the overlap between the RF power transistor activities of NXP and Freescale, according to the commission.
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