Advanced Micro Devices’ (AMD) planned acquisition of Xilinx for $35 billion will not occur by year-end. Citing confirmation from both companies, Reuters reports that the deal is now expected to close in the first quarter of 2022. AMD shares fell 2.10% to close at $145.15 on December 30.
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Advanced Micro Devices is a semiconductor company that manufactures and distributes chipsets, discrete and integrated graphics processing units used in computers, and data centers. AMD’s earnings report for Q4 2021 is scheduled for February 01, 2022.
Regulatory Hurdles
AMD reached an agreement to acquire Xilinx in October as it seeks to strengthen its competitive edge against rival Intel (INTC) in the data center chip market. The company expected to secure regulatory approval by year-end. It has since been confirmed that it is yet to complete the process.
The regulatory process has been delayed by tensions between the U.S. and China. Deals involving semiconductor and chip companies have faced significant regulatory hurdles from Chinese regulators, known for their intense antitrust reviews.
AMD is not the only company to face regulatory pressure amid the acquisition push. Nvidia (NVDA) has also seen its proposed acquisition of U.K.-based chip firm ARM Ltd. take much longer than anticipated. The company has also struggled to secure regulatory approval. The U.S. Federal Trade Commission has moved to lock the deal citing competition concerns.
Stock Rating
Deutsche Bank analyst Ross Seymore recently reiterated a Hold rating on AMD stock and raised the price target to $120 from $113, implying 17.33% downside potential to current levels. According to the analyst, 2021 has been one of the strongest years for the semiconductor sector, characterized by revenue growth on strong demand across the market. The analyst expects supply to be the biggest driver of fundamentals in the industry in 2022.
Consensus among analysts is a Moderate Buy based on 14 Buys and 9 Holds. The average AMD price target of $143.15 implies 1.38% downside potential to current levels.
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