Commission européenne, DG COMP MERGER REGISTRY, 1049 Bruxelles, BELGIQUE  
Europese Commissie, DG COMP MERGER REGISTRY, 1049 Brussel, BELGIË  
 
Tel: +32 229 -91111. Fax: +32 229 -64301. E -mail: COMP -MERGER -REGISTRY@ec.europa.eu . 
 EUROPEAN COMMISSION  
 
 
 
 
 
Brussels, 16.10.2019  
C(2019 ) 7499 final  
PUBLIC VERSION  
 
To the notifying party  
Subject : Case M.94 66 – Infineon/Cypress  
Commission decision pursuant to Article 6(1)(b) of Council 
Regulation No  139/20041 and Article 57 of the Agreement on the 
European Economic Area2 
Dear Sir or Madam,  
(1) On 11 September  2019, the European Commission received notification of a 
proposed concentration pursuant to Article 4 of the Merger Regulation by which 
Infineon Technologies  AG (“Infineon ” or the “Notifying  Party ”, Germany) 
intends to acquire within the meaning of Article 3(1)(b) of the Merger Regulation  
sole control of Cypress Semiconductor Corp oration  (“Cypress ”, USA) (the 
“Transaction ”). Infineon and Cypress are collectively r eferred to as the “ Parties ”.3 
                                                 
1  OJ L 24, 29.1.2004, p. 1 (the ‘Merger Regulation ’). With effect from 1 December 2009,  the Treaty 
on the Functioning of the European Union ( ‘TFEU ’) has introduced certain changes, such as the 
replacement of ‘Community ’ by ‘Union ’ and ‘common market ’ by ‘internal market ’. The 
terminology of the TFEU will be used throughout this decision.  
2  OJ L 1, 3.1.1994, p . 3 (the ‘EEA Agreement ’). 
3  Publication in the Official Journal of the European Union No C 314, 18.09.2019, p. 15.  In the published version of this decision, 
some information has been omitted 
pursuant to Article 17(2) of Council 
Regulation (EC) No 139/2004 
concerning non -disclosure of business 
secrets and other  confidential 
information. The omissions are shown 
thus […] . Where possible the 
information omitted has been replaced by 
ranges of figures or a general description.  
 
2 1. THE PARTIES  
(2) Infineon is active  in the  design, manufacture and distribution of a wide range of 
semiconductors and power semiconductors, including , inter alia , transistors, 
drivers, diodes, microcontrollers (including embedded control, radio -frequency 
and sensors), for a wide range of applications.  
(3) Cypress  is active in the manufacture and supply  of embedded systems solutions 
for automotive, industrial, consumer and enterprise end markets. Cypress’ product 
portfolio includes micr ocontrollers, analog integrated circuits, wireless and wired 
connectivity solutions and memory products.  
2. THE CONCENTRATION   
(4) The Transaction consists of the acquisition by Infineon of the sole control of 
Cypress.  Under the terms of the Agreement and Plan of  Merger  dated 3  June 
2019 , Infineon will acquire all of the issued and outstanding share capital of 
Cypress  (which is currently listed on the NASDAQ stock exchange ), via a merger 
with Infineon’s  indirectly wholly owned subsidiary IFX Merger Sub Inc.   
(5) The Transaction  therefore constitutes a concentration pursuant to Article 3(1)(b) 
of the Merger Regulation.  
3. EU DIMENSION  
(6) The undertakings concerned have a combined aggregate world -wide turnover of 
more than EUR 5 000 million4 (Infineon: EUR 7.6 billion; Cypress: EUR 2.1 
billion ). Each of them has an EU -wide turnover in excess of EUR 250 million 
(Infineon: EUR […] billion; Cypress: EUR […] million ), but they do not achieve 
more than two -thirds of their aggregate EU -wide turnover within one and the 
same Mem ber State.  The notified operation therefore has an EU dimension 
pursuant to Article 1(2) of the Merger Regulation.  
4. RELEVANT MARKETS  
(7) The Transaction concerns the semiconductor industry . 
(8) Semiconductors are materials, such as silicon, which act as an insulator, but are 
also capable of conducting electricity. Semiconductors are at the heart of devices 
such as diodes, transistors and other electronic components, and can be found in 
virtually every electronic device today. The end -products that contain se mi-
conductor devices range from base stations, mobile phones, computers, domestic 
appliances and cars to medical equipment, identification systems, large -scale 
industry electronics and aerospace equipment.  
                                                 
4  Turnover calculated in accordance with Article 5 of the Merger Regulation and the Commission 
Consolidated Jurisdictional Notice (OJ C 95 , 16.4.2008, p. 1).  
 
3 (9) Semiconductor devices are rarely bought as end -products by consumers. They are 
mainly bought by equipment manufacturers in virtually all sectors within the 
electronic equipment industry.  
4.1 Overview of the semiconductor industry  
(10) In previous decisions , the Commission  considered dividing the market for 
semico nductors by (i) category of semiconductor and by (ii) end -use application : 
i. As to the distinction by category, the Commission considered that it is 
appropriate to distinguish semiconductors in the categories of (i) 
integrated circuits (“ ICs”), (ii) discretes, (iii) optical semiconductors , and 
(iv) sensors and actuators.5 
ii. As to the distinction by end -use application, the Commission considered 
that there are six major applications for specific semiconductor devices: (i) 
communication, (ii) consumer, (i ii) computer, (iv) military, (v) industrial, 
and (vi) automotive. The semiconductors  manufactured for each 
application differ in their function and are not substitutable from one 
application to another.6 
(11) The results of the market investigation in the prese nt case confirmed th is general 
categorization of semiconductors. In particular, all respondents7 to the market 
investigation agreed that semiconductor devices could be classified into the four 
distinct categories of (i) ICs, (ii) discretes, (iii) optical s emiconductors and (iv) 
sensors and actuators.8 
(12) Considering that the Parties’ activities mainly overlap in ICs, for the purpose of 
this decision  the other categories of semiconductors are not discussed  further . 
4.1.1 Integrated Circuits  
(13) An IC is a semiconductor d evice composed of diodes, transistors and other 
electronic components, combined with conductive interconnect material, which 
controls the current and voltage of electricity running through it. ICs used in 
electronic devices are called “microchips” or “chip s” and contain several billion 
transistors along with diodes and other electronic components.  
(14) In its previous decisions, the Commission found that: (i) digital ICs; and (ii) 
analog ICs should be considered as separate markets , since t his differentiation 
                                                 
5  Commission decisions of 17 September 2015 in case M.7585 - NXP Semiconductors/ Freescale 
Semiconductor , paragraph  14 and of 18 January 2018 in case M.8306 - Qualcomm/NXP 
Semiconductors , recital 33.  
6  Commission decision of 24 June 2 002 in case M.2820 - STMicroelectronics/Alcatel 
Microelectronics , paragraph 11. A similar conclusion was reached in Commission decision of 17 
September 2015 in case M.7585 - NXP Semiconductors/ Freescale Semiconductor , paragraphs  44-
45. 
7  Throughout this decision, when the Commission refers to the (number of) respondents in relation to 
a given question of the market investigation , this excludes all respondents that have not provided an 
answer to that question or replied “I do not know ”, unless stated other wise. For  example, “a 
majority of respondents ” means a majority of respondents having replied to a given question and not 
having ticked “I do not know ”. 
8  See replies to Commission questionnaires Q1 to competitors and customers , question 3 . 
 
4 reflects the structure of customer purchasing categories and is in line with the 
standard definition provided by World Semiconductor Trade Statistics (WSTS). 
Semiconductor manufacturers generally classify ICs based on their ratio of digital 
and analog  content. If an IC contains solely digital or analog technology, it is 
labelled as a digital or analog IC, respectively.9 
(15) Within digital ICs, the Commission found three main sub -segments: (i) micro -
components; (ii) memory ICs; and (iii) logic ICs, given th at these products have 
different functions and features and  do not appear to be readily substitutable with 
each other .10  
(16) Respondents  to the market investigation have confirmed the relevance of the 
distinction between digital and analog IC s and, within digi tal ICs, between micro -
components,  memory ICs  and logic ICs .11 
(17) In its previous decisions , the Commission has also sub-segmented micro -
components into: (i) microprocessors (“ MPUs ”); (ii) microcontrollers (“ MCUs ”); 
and (iii) digital signal processors  (“DSPs ”).12 The results of the market 
investigation in the present case confirmed this segmentation and in particular 
that MCUs and MPUs are different products and generally cannot be substituted, 
both from a supply -side and demand -side perspective.13  
(18) Within ICs, t he Parties overlap primarily in the design, manufacture and sale of 
MCUs.  Therefore, for the purpose of the present decision, the Commission will 
not discuss further the other categories of ICs and micro -components.  
4.2 MCUs  
4.2.1 Product market definition  
(19) An MCU is  a stand -alone device that performs a dedicated or embedded 
computing function within an electronic system without the need of other support 
circuits. An MCU is principally a controlling device, which processes or 
manipulates data received in real time. Th is differentiates MCUs from MPUs, 
which are more powerful processing devices. While MPUs are capable of 
processing and carrying out several tasks simultaneously, MCUs are, by contrast, 
dedicated to a single, pre -defined task. The objective of MCUs is to in terface with 
the “real world” (such as processing measurements from sensors) or to supervise 
and control certain system functions (such as power management, battery 
                                                 
9  Commission decisions of 17 September 2015 in case M.7585 - NXP Semiconductors/ Freescale 
Semiconductor , paragraph 38 and of 18 January 2018 in case M.8306 - Qualcomm/NXP 
Semiconductors , recital 33.  
10  Commission decision s of 17 September 2015 in case M.7585 - NXP Semi conductors/ Freescale 
Semiconductor , paragraphs 39 and 46, and of 18 January 2018 in case M.8306 - Qualcomm/NXP 
Semiconductors , recital 33.  
11  See replies to Commission questionnaires Q1 to competitors and customers , question 4. 
12  Commission decisions of 17 September 2015 in case M.7585 - NXP Semiconductors/Freescale 
Semiconductor , paragraphs 39-40 and 46, and of 18 January 2018 in case M.8306 - Qualcomm/NXP 
Semiconductors , recital 33. See also Commission decision s of 02 December 20 09 in case M. 5535 - 
Renesas Technology/NEC Electronics  and of 26 January 2011 in case M.5984 - Intel/Mcafee , 
paragraphs 23 -30.  
13  See replies to Commission questionnaires Q1 to competitors and customers , question 5 . 
 
5 charging, actuators or interface to peripherals). MCUs are in general less 
expensive and le ss power -consuming than MPUs.   
4.2.1.1  The Notifying Party’s view  
(20) The Notifying Party submit s that MCUs could be sub -divided (a) according to 
their technical parameters (i.e., number of bits they contain  (8, 16  or 32 -bits)) or 
(b) whether t hey are either general purpose  or used for a specific application.  
(a) Segmentation by bit -size 
(21) The Notifying Party submits that customers select MCUs on the basis of the 
processing capability required by an application, degree of interfacing needed and 
the degree of power consumption. An 8-bit MCU would feature  a low -gate count, 
software simplicity a nd lower complexity, which would make  the 8 -bit MCU 
cheaper than other types of controller. 8 -bit MCUs would be  often designed into 
low-performance segments where the product lifecycle can be long such as 
metering, building and home control segments and ho me appliances.  
(22) 16-bit MCUs would provide more precision than 8 -bit MCUs, and would be  used 
for applications which require more accuracy, such as industrial robotics. 16 -bit 
MCUs would be  more efficient at performing instructions and would have longer 
timer s. Applications requiring high -end processing power (such as video game 
consoles) would require a 32 -bit MCU.  
(b) Segmentation by end -use application  
(23) Concerning a possible distinction of MCUs based on their end -use, the Notifying 
Party submit s that substitutab ility among MCUs designed for different 
applications , although technically feasible , would not be optimal in terms of 
performance or cost -effectiveness.  Substitutability between different MCU types 
would be dependent on a number of factors, including: (i) the relevant end -use 
application (automotive, consumer, industrial , etc.); (ii) the maturity of the 
technology; (iii) whether there is an operating system between the software and 
hardware elements of the MCU; and (iv) whether the customer wishes the MCU 
to be cost - and performance -optimised, or rather merely ‘fit -for-purpose’.  
(24) The Notifying Party further submit s that a pplication specific MCUs could be 
segmented into the following product categories: (i) automotive; (ii) ID and smart 
card; (iii) consumer; ( iv) industrial; (v) computers and peripherals; and 
(vi) wireless communication . 
(c) Automotive MCUs  
(25) With specific respect to the automotive sector, the Notifying Party, on the basis of 
a Commission precedent, submits that MCUs could be further segmented on the  
basis of particular kinds of automotive semiconductors: (i) powertrain; (ii) 
chassis; (iii) safety; (iv) body and comfort; (v) infotainment ; and (vi) security.14 
                                                 
14  Commission decision of 18 January 2 018 in case M.8306 - Qualcomm/NXP Semiconductors , recital 
30.  
 
6 (26) However, the Notifying Party adds that i n terms of manufacturing, any supplier of 
automotive M CUs could  manufacture any type of automotive MCUs for a wide 
range of sub -segments , because the core architecture is often similar across 
different types of automotive MCU s. 
(27) In any case , the Notifying Party submit s that the precise scope of the relevant 
market s can be left open as the Transaction does not raise serious doubts as to its 
compatibility with the internal market irrespective of the market definition 
adopted by the Commission.  
4.2.1.2  The Commission ’s assessment  
(28) In a past decision , the Commission considered that MCUs could be sub -
segmented depending on the number of bits , although in the end it left the market 
definition open .15 Notably, the Commission considered that MCUs could be 
distinguished on the basis of the  number of bits (8, 16  or 32-bit), as this 
distinction relates to both their performance and cost.  
(29) The vast majority of the respondents to the market investigation has confirmed 
the relevance of a distinction based on the number of bits. Notably, it has be en 
argued that the heart of an MCU is its computational core, which in itself differs 
from each other based on the data width it can handle at one time. This difference 
would create significant variations in the speed and accuracy of the mathematical 
opera tions carried out by MCUs. Therefore, a classification based on bits would 
be relevant .16 
(30) In its previous decision the Commission also considered , although ultimately left 
open, a distinction based on MCUs’ intended use (i.e.,  whether they are either 
genera l purpose or used for a specific application ).17 In the present case, t he result 
of the market investigation has confirmed this distinction. Respondents stated that 
MCUs in general are specifically optimized to carry out limited set of functions. 
Application -specific MCUs  would be customized and optimized for certain 
applications to enable high performance and quality. They would be used for very 
specialized functionality, and therefore could not be substituted from both a 
demand -side and a supply -side perspective.18 
(31) The vast majority of responden ts to the market investigation also confirmed that 
application -specific MCUs belong to the following distinct product categories, 
depending on their application: (i) automotive; (ii) ID and smart card; (iii)  
consumer; (iv) industrial ; (v) computers and peripherals; (vi)  wireless 
communication; and (vii) wired communications.19 Respondents considered  that 
                                                 
15  Commission decision of 17 September 2015 in case M.7585 - NXP Semiconductors/ Freescale 
Semiconductor , paragraph 46. 
16  See replies to Commission questionnaires Q1 to competitors and customer s, questions 6 and 6.1 . 
17  Commission decision of 17 September 2015 in case M.7585 - NXP Semiconductors/ Freescale 
Semiconductor , paragraphs 44-45. 
18  See replies to Commission questionnaires Q1 to competitors and customers , questions 7 and 7.1 . 
19  See replies to Commission questionnaires Q1 to competitors and customers , questions 9 and 9.1 . 
One respondent to the market investigation just added that in its opinion “Consumer” would be a 
broad category and that a large number of general purpose MCUs co uld serve as ‘consumer’ MCUs. 
Moreover, there would be other minor categories of application -specific MCUs based on specific 
use-cases  or sectors , such as, motor control MCUs, smart metering MCUs, healthcare -optimized 
 
 
7 application -specific MCUs of one category would not be substitutable with those 
of another category, both f rom a demand side and a supply side perspective. 
Different applications would require different characteristics, performance and 
quality levels which would not to be substitutable. For example, MCUs for 
automotive application would require high reliability  and robustness which would 
need to be qualified by industry standard and by customers.20 
(32) With specific respect to automotive MCUs, a ll respondents to the market 
investigation confirmed the relevance of th e distinction based on specific end -
use/application : (i) powertrain; (ii) chassis; (iii) safety; (iv) body and comfort; (v) 
infotainment; and (vi) security .21 Automotive MCUs would be highly specialized 
and components needed to perform a specific function would be highly 
optimized. Therefore, substituting th em for other functions would be either 
inefficient, or cost -ineffective, or plainly impossible.22 
4.2.1.3  Conclusion on product market definition  
(33) The Commission considers that , for the purposes of this d ecision, the exact 
product market definition with regard to MC Us can be left open , as the 
Transaction does not raise serious doubts as to its compatibility with the internal 
market irrespective of whether MCUs are  segmented on the basis of bit -rate or 
end-use. 
4.2.2 Geographic market definition  
4.2.2.1  The Notifying Party ’s view  
(34) In line with Commission’s previous decisions, t he Notifying Party considers that 
the geographic market for semiconductors (and sub -segments) is global  because: 
(i) customers are large companies that purchase semiconductors on a worldwide 
basis; (ii) there are no national quotas, tariffs or technical specifications; (iii) there 
are no significant price differences between countries; (iv) transport costs are very 
low; and (v) suppliers compete at a worldwide level.  
4.2.2.2  The Commission ’s assessment  
(35) In NXP/Freescale , the Commission found that the geographic scope of the 
semiconductor markets was likely worldwide in scope, as competition between 
suppliers is worldwide, transport costs are very low, and price differences among 
regions are small. The exact market defini tion was,  however, ultimately left 
open.23 
                                                                                                                                                 
MCUs, smart appliance MCUs, defence MC Us, space MCUs, aerospace MCUs, etc. (NXP  and 
MicroChip , repl ies to question 9.1).  
20  See replies to Commission questionnaires Q1 to competitors and customers , questions 8 and 8.1 . 
21  Commission decision of 18 January 2018 in case M.8306 - Qualcomm/NXP Sem iconductors , recital 
35. 
22  See replies to Commission questionnaires Q1 to competitors and customers , questions 10 and 10.1 . 
23  Commission decision of 17 September 2015 in case M.7585 - NXP Semiconductors/ Freescale 
Semiconductor , paragraph 58. 
 
8 (36) In Qualcomm/NXP , the Commission conclude d that the geographic scope of the 
semiconductor product markets at issue  in that case, including semiconductors for 
automotive applications, was likely worldwide .24 
(37) The resul ts of the market investigation  in the present case  confirm  that the 
geographic  scope of the semiconductor markets is likely to be worldwide . 
Respondents to the market investigation have submitted that the semiconductor 
industry has a global footprint, with  supply chain spanning across multiple 
countries and in relatively free market conditions. Suppliers would be generally 
able to compete with each other across geographical boundaries.25  
4.2.2.3  Conclusion on geographic  market definition  
(38) For the purposes of this decision, the Commission therefore concludes that the 
geographic scope of the semiconductor product markets relevant in this case, 
notably MCUs  (and sub -segments) , is likely worldwide.  
5. COMPETITIVE ASSESSMEN T  
5.1 Affected Markets  
(39) According to the Notifying Party , the Parties are mainly active in the manufacture 
and supply of distinct semiconductor products. Infineon’s focus would be on 
power semiconductors, whereas Cypress’ focus would be on connectivity 
products and MCUs.  
(40) As already mentioned above in section 4 , the Parties overlap primarily in the 
design, manufacture and sale of MCUs. The  following table is based on the data 
provided by the Notifying Party and relates to the different segments where the 
Parties’ activit ies overlap:  
 
 
 
 
 
 
 
 
 
                                                 
24  Commission decision of 18 January 2018 in case M.8306 - Qualcomm/NXP Semiconductors , recital 
242. 
25  See replies to Commission questionnaires Q1 to competitors and customers , questions 11 and 11.1 . 


 
11 competitors, like Texas Ins truments (with a market share of [10-20]%) and NXP 
([10-20]%) will also continue to  provide viable supply alternative s to customers.  
(51) On all alternative market definitions in the MCUs sector , market share data 
provided by the Notifying Party shows that the Parties’ combined market share 
will remain below 20%  and that several  significant competitors, with market 
shares higher than that of the merged entity, will remain active on the market.27  
(52) The results of the market investigation confirms that  the Parties are not  close 
competitors for MCUs  in general  and 16 -bit MCUs in particular . The majority of 
respondents considers that, after the merger, there will be sufficient supply 
alternative and that the merged entity will face competitive constraint s from other 
suppliers with respect to 16 -bit MCUs and MCUs in general.28 With specific 
reference to the 16 -bit segment, the majority of respondent s indicate s that the 
Transaction will not change competitive dynamics considering that , while 
Infineon is a key player , Cypress has a more limited role.29 Similar views have 
been expressed with respect to the automotive segment : a reasonable line -up of 
suppliers would remain in terms of capacity, technological and commercial 
competition . Furthermore, the Parties’ products are considered to be mainly 
complementary.30 
(53) In light of the above, the Commission concludes that the Transaction does not 
give rise to serious doubts with regard to its compatibility with the internal market 
as a result of possible horizontal effects  in the 16-bit MCUs market .  
5.3 Possible conglomerate effects  in semiconductors markets  
5.3.1 Introduction  
(54) In the majority of circumstances, conglomerate mergers do not lead to any 
competition problems but in certain specific cases there may be harm to 
competition.31 The main concern in the context of conglomerate effects is that of 
foreclosure.32 Conglomerate mergers may allow the merged entity to combine 
products in related markets and this may confer on the merged entity the ability 
and incentive to leverage a strong mar ket position from one market to another by 
means of tying or bundling, or other exclusionary practices.33 
(55) In assessing the likelihood of conglomerate effects, the Commission examines, 
first, whether the merged firm would have the ability to foreclose its ri vals, 
second, whether it would have the economic incentive to do so and, third, whether 
a foreclosure strategy would have a significant detrimental effect on competition, 
                                                 
27  Form CO, paragraph 143 . 
28  See replies to Commission questionnaires Q1 to competitors and customers , questions 13.1 and 
13.2.  
29  See replies to Commission questionnaires Q1 to competitors and customers , question 13.2.1.  
30  See replies to Commission questionnaires Q1 to competitors and customers , question 13.3.1.  
31  Guidelines on the assessment of non -horizontal mergers under the Council Regulation on the 
control of concentrations between undertakings ( “Non-Horizontal Merger Guidelines ”), OJ C 265, 
18.10.2008 , paragraph 92.  
32  Non-horizontal Merger Guidelines, paragraph 93.  
33  Non-horizontal Merger Guidelines, paragraph 93.  
 
12 thus causing harm to consumers. In practice, these factors are often examined 
togethe r as they are closely intertwined.34 
(56) As expressly submitted by the Notifying Party, the key strategic rationale of the 
Transaction is to combine two complementary product portfolios to enable the 
merged entity to offer a broad suite of solutions to its cust omers. Currently, 
Infineon’s key focus is the manufacture and supply of power semiconductors and 
security solutions. By contrast, Cypress is focused on the supply of MCUs and 
connectivity products. Accordingly, the Commission has examined whether the 
Trans action would give rise to conglomerate effects by foreclosing competitors in 
one or more of the semiconductors markets.  
5.3.2 The Notifying Party’s view  
(57) The Notifying Party submits that the Transaction would not give rise to any 
conglomerate concerns .  
(58) First, th e Parties would have no ability to foreclose competitors considering that 
their respective market shares do not exceed 30% in relation to any of the 
neighbouring markets on which they are active.  
(59) Furthermore, f ollowing the Transaction, the merged entity will continue to face 
stringent competition from a large number of international and local suppliers . 
Post-Transaction, Infineon will be the eighth largest  global semiconductor 
supplier and many of its competitors would have a similar range of products as 
the merged entity.  
(60) The Notifying Party further submits that although the merged entity may cross -
sell, bundle or integrate the enlarged portfolio, it would have no incentive to 
attempt to foreclose competitors. G iven the size, strength and international 
presence of the Parties’ competitors , any attempt by the merged firm to force 
them out of a particular product market would likely be met by a counter -strategy.  
(61) In addition, the Parties’ customers would have sufficient buyer power to deter 
anticompetitive f oreclosure. The market would be characterised by countervailing 
buyer power of large, sophisticated, well informed Tier 1 suppliers, OEMs and 
distributors, which would not accept any bundling practices which would not suit 
their interests and would purchas e standalone components from rival suppliers 
(following a “mix -and-match” approach).  
(62) Finally , the Notifying Party submits that in no circumstances the integrated 
products or bundled solutions would represent the only offering provided by the 
merged entity.  In all cases, the individual products will remain available as 
standalone products (in line with customers’ tender processes expectations).  
                                                 
34  Non-horizontal Merger Guidelines, paragraph 94.  
 
13 5.3.3 The Commission ’s assessment  
5.3.3.1  Ability to foreclose  
(63) In order to have  the ability  to foreclose rivals, the merged  entity must have a 
significant degree of market power in at least one of the markets  concerned. That 
is, at least one of the Parties ’ products must be viewed by many customers as 
particularly important and there must be few relevant alternatives for that 
produc t.35 
(64) In this respect, the Commission note s that the merged entity would have a market 
share of [20-30]% in the market for 16 -bit MCUs. Moreover, there are at least 
two significant competitors with a comparable market position ( Renesas and 
Texas Instruments ) and a third competitor with a market share  close to 15% . The 
Commission is therefore of the view that based on its position in the market for 
16-bit MCUs , it is unlikely that after the Transaction the merged entity will have 
the ability to leverage its p osition into other neighbouring markets.  Moreover, the 
Parties’ combined market share in other MCU markets will remain below 20%.  
(65) The Notifying Party has also provided the Parties’ and competitors’ market shares 
for other  semiconductors products that the m erged entity envisage  to [details on 
strategy ] to obtain the planned synergies. According to those market data, the 
merged entity ’s estimated market shares will not exceed 30% in any of those 
semiconductors markets and significant competitors will remain a ctive in each 
market .36 
(66) The results of the  market investigation confirm  that the Parties do not sell any 
product that would be difficult to source from alternative suppliers . Respondents 
thus indicated that alternatives would remain on the market for each p roduct of 
the respective product portfolio and that other competitors would have capability 
to supply equivalent or similar products.37 
(67) Few respondents expressed concerns with respect to the automotive sector and 
submitted that through the offering of a large range of automotive 
semiconductors, the merged entity would have an advantage over its main 
competitors.38 However, the majority of respondents  to the market investigation 
confirmed that customers would be able to procure automotive semiconductors 
from the Parties’ competitors and mix -and-match them as an alternative to the 
                                                 
35  Non-horizontal Merger Guidelines, paragraph 99.  
36  Form CO, paragraphs 105 -138, 161 and 17 1-2, Table 4 . Notably the Notifying Party has provided 
market information for the following products: (i) Non automotive MEMS - 
microelectromechanical systems  – sensors, (ii) Security ICs , (iii) Automotive MCUs – ADA S, (iv) 
Power transistors and thyristors , (v) Gate driver ICs , (vi) Power ICs , (vii) Small signal and discretes , 
(viii) IoT MCU , (ix) Connectivity ICs – Wi-Fi, (x) Connectivity ICs – Bluetooth , (xi) Connectivity 
ICs – BLE , (xii) NOR flash memory semiconductors . 
37  See replies to Commission questionnaires Q1 to competitors and customers , questions 16 and 16.1. 
It is worth noting that of the only two respondents who stated that the Parties have “must -have” 
products, one did not give any further expl anation and the other confirmed that the market would be 
competitive but once a product is designed into a particular product, it could be difficult to change 
(Avnet, question 16.1).  
38  See replies to Commission questionnaires Q1 to competitors and custome rs, questions 17, 17.1 and 
20.1.  
 
14 merged entity’s bundle.39 In particular, it has been argued that w hile bundled 
solutions are attractive from  an end customer perspective , as they allow the 
simplification of the supp ly chain and possibly cost savings , they would not 
preclude sophisticated customers like auto mobile  manufacturers from negotiating 
separate deals with alternative suppliers to replace one or more of the bundled 
products. Most of automotive customers would have internal engineering 
resources to mix -and-match different products from different sources.40 
(68) Based on the above, the Transaction  is unlikely  to confer the merged entity  with 
the ability to leverage its market position in the automotive MCUs market s to 
foreclose competitors  in closely related markets .  
5.3.3.2  Incentive to foreclose  
(69) The Commission has also assessed whether the merged entity will have an 
incentive  to engage in bundling of different semiconductors , to foreclose rivals 
from effectively competin g for customers who purchase different products . 
(70) The merged entity will continue to face several  credible competitors, many of 
which are able to offer the same range of products  (as single solutions or bundles)  
as the Parties.  These suppliers would thus be  able to respond to the merged entity 
bundling initiatives by offering equally attractive solutions.  Accordingly, t he 
market investigation  confirms that, after the Transactions, by integrating the ir 
respective product portfolios, the Parties will not gain a competitive advantage on 
their main competitor s, but rather achieve the same breadth of offer.41 
(71) The possible sale of bundles at a discount  by the merged entity  would therefore  
unlikely lead to the marginalisation of competitors, who will be able to repli cate 
the offers and/or to propose different discounts on other bundles.  
(72) Consistently with this view , the majority of the participants to the market 
investigation submitted that the merged entity, through the offering of bundles 
including different products , would not have the incentive to foreclose competing 
operators in the MCUs se gment .42 
(73) Based on the above, the Commission considers that the merged entity is unlikely 
to have the incentive  to foreclose competitors in semiconductors market s by 
bundling different products post-Transaction.  
5.3.3.3  Impact on effective competition  
(74) Regardless of whether the merged entity has either the ability or the incentive to 
foreclose rivals in the semiconductors markets  by bundling different products , the 
Commission considers that such strategy would not have an appreciable impact 
on competition.  
                                                 
39  See replies to Commission questionnaires Q1 to competitors and customers , questions 19 and 19.1.  
40  NXP’s and Renesas’ replies to Commission questionnaires Q1 to competitors and customers , 
question 19.1.  
41  This is pa rticularly true for automotive components, s ee replies to Commission questionnaires Q1 to 
competitors and customers , question 17.1.  
42  See replies to Commission questionnaires Q1 to competitors and customers , questions 20.1, 20.2, 
and 20.3.  
 
15 (75) Any potential impact of such bundling strategy would be mitigated by the ability 
of competitors to react to such strategy by (i) lowering the price of single 
products , or (ii) offering  similar or other bundles based on their portfolio . This 
could be particularly the case with respect to the Parties’ main competitors (NXP, 
Renesas, Texas Instruments, etc.), that have a similar market presence and 
comparable products portfolios.  
(76) The resul ts of the market investigation confirm the limited effect of the 
Transaction. Notably the vast majority of the participants to the market 
investigation submitted that the Transaction would either positively impact the 
market s for MCUs, 16 -bit MCUs or autom otive MCUs  or not affect these markets  
at all .43 Similarly, the vast majority of respondents  submitted that the Transaction 
would not have a negative impact on their activity.44 
5.3.3.4  Conclusion  on conglomerate effects  
(77) In light of the above, the Commission considers that the Transaction does not give 
rise to serious doubts with regard to its compatibility with the internal market as a 
result of conglomerate effects in the semiconductors markets.  
6. CONCLUSION  
(78) For the above reasons, the European Commission has d ecided not to oppose the 
notified operation and to declare it compatible with the internal market and with 
the EEA Agreement. This decision is adopted in application of Article 6(1)(b) of 
the Merger Regulation and Article 57 of the EEA Agreement.  
For the C ommission  
 
 
(Signed)  
Margrethe VESTAGER  
Member of the Commission  
                                                 
43  See replies to Commission questionnaires Q1 to competitors and customers , questions 22.1, 22.2 
and 22.3. The only negative replies were connected to the possible bundling in the automotive 
MCUs sector, on which see previous paragraph (67). 
44  See replies t o Commission questionnaires Q1 to competitors and customers , questions 23 and 23.1.