Rumored ST-Infineon merger could draw ire of antitrust authorities

By Colleen Taylor, Contributing Editor -- Electronic News, 8/15/2007

Rumors of a potential takeover of Germany-based semiconductor and systems solutions provider Infineon Technologies by Switzerland-based STMicroelectronics NV have abounded in the industry in recent weeks, but analysts say that an attempt at a merger could draw ire from the notoriously stringent European antitrust authorities.

ST and Infineon have displayed a closer relationship in recent months. In July, ST left the Crolles2 Alliance and announced it would join Infineon and others in IBM's Common Platform ecosystem to share the costs of semiconductor development down to 22-nm and possibly beyond.

In a report issued this morning, England-based market research firm IMS Research said that a combined company of ST and Infineon would likely become a "power semiconductor behemoth dwarfing its competitors in the power management market." 

According to the firm, the combined company would become by far the largest global supplier of power discretes, with a market share of more than 15 percent, which is significantly more than current leaders, Fairchild Semiconductor and International Rectifier (IR). The tie-up would also see it leap-frog past these two companies as the largest supplier of power MOSFETs, the firm said.

As opposed to its U.S.-based competitors Fairchild and IR, an ST-Infineon merger would likely be based in Europe, which would undoubtedly attract even more attention from the European Commission (EC), a governmental authority that has an exceptionally strong reputation for cracking down on anticompetitive business practices.

"Whilst rumors are rife, the possible French-Italian-German merger could attract the attention of the European competition authorities, as it would hold one-third of the European power discretes market," IMS research director Ash Sharma said in a statement.

"As well as dwarfing other suppliers to the power discretes market, this merger would see the company dominating the global power ICs market, making it huge in comparison to current largest suppliers Texas Instruments and National Semiconductor," Sharma added.

ST and Infineon could not be reached by Electronic News for comment on the merger rumors