China’s State Administration for Market Regulation is holding up the takeover by II-VI of rival component maker Finisar. There are already too few companies making high-end components. A good argument can be made to block the deal on competition grounds.
Finisar makes some of the most advanced optical components. Huawei produces many of its own optics and can work around the U.S. blockade. It will continue buying components from the U.S. if permitted and wants to always have that option.
China is such a large part of the global market for electronics that it can effectively block any merger. The institutional investors that own most of Finisar will suffer a loss of several hundred million if the deal doesn’t go through.(more…)