Ahead of the closing of buying Xilinx (NASDAQ:XLNX), Advanced Micro Devices (NASDAQ:AMD) rallied from an $80 low to over $95 last week. To sustain the rally, AMD needs the deal approved so it may consolidate the business.
On June 30, AMD received the European Union’s unconditional approval. China is the only country holding back the deal closing.
A few years ago, China took so long to approve the Qualcomm (NASDAQ:QCOM) and NXP Semiconductor (NASDAQ:NXPI) deal that QCOM had to call off the deal. Chances are low that this time, China will delay its decision or not approve the deal. The country has already increased its regulatory authority on Alibaba (NYSE:BABA), cracked down on DiDi (NYSE:DIDI) consumer data issues, and is scrutinizing the Nvidia/ARM deal.
If China blocks the AMD/Xilinx deal, it would face a blowback among other regulators.
AMD’s PC and server CPUs are enjoying strong demand. To expand its addressable market, it will need Xilinx. Intel already acquired Altera in 2015. Now, AMD may compete in the programmable logic devices space to pressure Intel.
AMD is a strong company with more upside ahead in the coming years.
