The takeover of Xilinx by AMD should be completed by the end of the year. Markt & Technik spoke with Victor Peng, President and CEO of Xilinx, about the acquisition and the supply situation, among other things.
Markt & Technik: AMD wants to take over Xilinx for around 35 billion dollars, the acquisition should be completed by the end of the year. The plan is for Lisa Su to remain CEO of AMD and for you to head the FPGA division in the future. This is a unique situation as, in many cases, CEOs of acquired companies often depart...
Victor Peng: I see this acquisition as extremely positive. AMD and Xilinx are not only complementary in terms of our products and technologies, but also in most markets. There’s only overlaps with the data center part of the business.
The two companies complement each other perfectly. Xilinx is very diversified, the company's success is based on solid businesses with steady and long-term growth. AMD, on the other hand, has grown enormously fast in recent years. When the two companies are combined, we’ll enjoy the benefits of a diverse customer and market base, and also experience enormous growth rates. This is often not the case, either companies grow very fast but are typically not very diversified, or they are very diversified but don't grow as fast in return. We will have both. AMD will move us forward in the data centre space and we can introduce AMD technologies in our core markets, such as automotive, communications and industrial. There is a huge TAM opportunity open to the company as a whole.
The shareholders of both companies have overwhelmingly approved the acquisition, now only the remaining authorities need to give the green light. This is out of our hands, but we are convinced that there will be no problems and that the takeover will be completed by the end of this year.
Altera had lost significant market share after the Intel takeover, isn't Xilinx in danger of doing the same?
Many people ask this question because there are many similarities in the takeover. But honestly, I am not worried at all that this could happen. For one thing, Xilinx is number one in the PLD market and that is because of our innovative strength. This means that even if Altera had remained independent, it would have lost market share. Secondly, when Altera was taken over by Intel, it was much smaller than Intel. AMD is also bigger than Xilinx, but the differences are not that huge. This means that AMD's acquisition of Xilinx also has a big impact on AMD, not only in terms of sales, but also in terms of profitability. AMD is below 40 per cent, we are at 70 per cent, so AMD is certainly also very interested in ensuring that the takeover does not cause us to lose out in the market. But there are many other reasons, starting with the mindsets of the CEOs of both companies. Personally, I believe in this takeover and, accordingly, I will stay with the company after the takeover. I also think that many of my colleagues see it that way. John Daane and the rest of the management team left Altera after the takeover. And one thing must not be forgotten either: Lisa Su and I are aware of Altera's development after the takeover and we will do everything we can to prevent that.
The supply situation on the semiconductor side is tight, with TSMC in particular under pressure. Avnet quotes delivery times of over 50 weeks for Xilinx components. Are all products affected by this and when can relief be expected?
Most of our products are affected by delivery problems, but the extent to which delivery times have increased varies. We are actively working to bring some relief to our customers this year, but will not be able to return to a completely normal situation until sometime in the first half of 2022.
Beginning or end of the first half of 2022?
It is difficult at this stage to predict exactly when the measures will all take effect, I can only emphasise that we are doing everything we can to ensure that we return to normal delivery times as quickly as possible. We have been working very closely with our customers and our suppliers, including the qualification of new suppliers, to be able to meet our customers' key needs. In this context, I would like to add that in the last two quarters, despite the supply shortages, we have been able to increase sales, more than was expected, which also shows that we are doing everything we can to supply and support our customers.