The American news agency Bloomberg reports with reference to people familiar with the process. Accordingly, the Committee for Foreign Investment in the United States (CFIUS) considers the takeover to be a risk to national security. Infineon tried to reach an agreement with the US government, but failed.
The DaxGroup did not want to comment on Friday morning when asked by Handelsblatt. Current proceedings were not commented on, it said. The US authorities and Cypress also made no comments. The US regulators apparently fear that the transaction could put American know-how in the hands of the Chinese. Infineon generates a good quarter of its sales in the People’s Republic.
The US President has the final say on the matter. Donald Trump has already banned two big deals in the semiconductor industry. The takeover of the leading manufacturer of mobile phone chips, Qualcomm, by Broadcom, and the sale of Lattice Semiconductor to investors connected to China.
Infineon itself failed in 2017 when it tried to buy its American competitor Wolfspeed. Even then, the CFIUS authority had concerns. Just two weeks ago, Infineon’s boss Ploss said that his company was in “productive talks” with the authorities in the United States.
At the Annual General Meeting, the manager was confident: “As of today, we expect to be able to complete the takeover towards the end of this or the beginning of the coming quarter.” Ploss had announced the largest transaction in the company’s history last June, and discussions have continued since then .
Americans are afraid of China’s influence in the future
“At Infineon, the CFIUS is particularly concerned that one day the Chinese will take over Infineon completely or at least a large part of it and thus gain access to these important technologies,” explains Roger Entner, founder of the industry consultancy Recon Analytics. He therefore considers a ban likely. The US agency CFIUS for foreign investments is finally becoming clearer that semiconductors are used in both the civilian and the military sector.
“German companies in particular are considered susceptible to Chinese influence,” says Roger. After all, there have been cases like Kugler in Germany, in which Chinese people got in to get the technology.
Nevertheless, Entner does not really believe that the Cypress takeover by Infineon is really a danger. The Americans would theoretically also have the option of preventing a potential Chinese takeover of Infineon.
But it is also a political question: “If the relationship between Germany and the United States were closer, these problems would be smaller”, Entner is convinced.
Shareholders would pay a high price
Should Trump actually ban the purchase, it would be a big blow to Ploss. With Cypress, Infineon will strengthen its core business of power semiconductors, sensors and security controllers, Ploss said at the general meeting in mid-February. In this way, Infineon can serve a wider range of applications and offer customers complete solutions.
Nothing should come of it now. In addition, the group would have advanced among the ten largest chip manufacturers in the world. The shareholders did not only see the takeover as positive anyway. The strategic logic is obvious, said Markus Golinski, Union Investment’s portfolio manager at the Annual General Meeting.
Infineon will thus become the world’s largest chip supplier for the automotive industry, gain better access to the Japanese market and close the product gap in microcontrollers. However, the shareholders would pay a high price for this: Firstly, through the dilution effect, which had particularly hurt due to the capital increase in June at low prices.
Secondly, due to the rise in debt, which could lead to a deterioration in the credit rating and thus to higher financing costs. “What return this investment of 9 billion euros will generate is still uncertain,” complained Golinski.
But that’s not all: “The desired strengthening of the market position, the planned synergy effects and the resulting higher profits have yet to be shown.” In addition, the price is at the pain threshold. However, some shareholders have long doubted that Infineon will even get the approval would.
“We have had bad experiences in the US”, emphasized Daniela Bergdolt from the German Association for the Protection of Securities (DSW). The shareholder protector could be right. If the takeover actually bursts, Infineon should receive high compensation payments.
In addition, the group is sitting on several billion euros that it has already secured for the takeover – through a capital increase and through bonds. Cypress stocks lost nearly a fifth of their value in New York on Thursday. Infineon’s papers fell a good four percent on Friday morning in early trading in Frankfurt.
More: The chipmaker has been concerned about the approval of a purchase in America by the authorities for months.