In a surprising turn of events, Intel has announced that it will no longer be acquiring Tower Semiconductor in a deal worth $5.4 billion. The decision comes after Intel was unable to obtain the necessary regulatory approvals, specifically in China. This acquisition was a strategic move by Intel to expand its foundry business and better compete with rivals like TSMC.
Tower Semiconductor, also known as TowerJazz, is a major player in the chip manufacturing industry, with fabrication facilities in Israel, Italy, the US, and Japan. While they may not focus on cutting-edge technology, Tower excels in manufacturing large volumes of chips for various industries such as automakers, equipment manufacturers, and the medical field.
Before pursuing the Tower acquisition, Intel was reportedly in talks to acquire GlobalFoundries, a much larger chip manufacturer and AMD spinoff, for a staggering $30 billion. Intel’s commitment to expanding its foundry services is evident with its plans to build two factories in Arizona and a massive semiconductor facility in Ohio, aiming to become the second-largest global external foundry by 2030.
Although the Tower acquisition did not materialize, Intel expressed its continued respect for the company and its willingness to explore future opportunities for collaboration. As part of the termination, Intel will pay a fee of $353 million to Tower. Despite this setback, Intel remains focused on its roadmap to maintain leadership in transistor performance and power performance by 2025.
Intel Cancels Acquisition of Tower Semiconductor
In a recent announcement, Intel revealed that it will no longer be acquiring Tower Semiconductor for $5.4 billion. The decision was made due to the company’s inability to obtain the necessary regulatory approvals in a timely manner, particularly in China. This comes as a setback for Intel, as the acquisition was intended to expand its foundry business and better compete with rivals like TSMC.
Tower Semiconductor, also known as TowerJazz, is a chip manufacturer with fabrication facilities in Israel, Italy, the US, and Japan. While the company does not focus on cutting-edge technology, it specializes in manufacturing large volumes of chips for various industries, including automotive, medical, and equipment manufacturing. This aspect made the acquisition attractive to Intel, as it sought to broaden its reach in these sectors.
Prior to pursuing the Tower Semiconductor deal, Intel was reportedly in talks to acquire GlobalFoundries, a much larger chip manufacturer and AMD spinoff, for around $30 billion. Intel’s ambition to strengthen its foundry business is evident in its recent initiatives, such as launching a separate business unit dedicated to foundry services and committing $20 billion to build two factories in Arizona. Additionally, the company has plans to construct a massive semiconductor facility in Ohio, which is expected to become the largest silicon manufacturing location globally.
Despite the cancellation of the acquisition, Intel remains focused on its long-term goals. The company aims to retain leadership in transistor performance and power performance by 2025 and aspires to become the second-largest global external foundry by 2030. Intel expressed its continued respect for Tower Semiconductor and expressed openness to future collaborations. As part of the termination agreement, Intel will pay a fee of $353 million to Tower.
In conclusion, Intel’s decision to cancel the acquisition of Tower Semiconductor highlights the challenges faced in obtaining regulatory approvals. While the acquisition would have bolstered Intel’s foundry business, the company remains committed to its roadmap for technological advancements and growth in the semiconductor industry. The termination of the deal does not diminish Intel’s ambitions, and it will continue to seek opportunities for collaboration in the future.
Takeaways:
- Intel has canceled its acquisition of Tower Semiconductor due to regulatory approval challenges.
- Tower Semiconductor specializes in manufacturing large volumes of chips for various industries.
- Intel’s focus on strengthening its foundry business is evident in its recent initiatives.
- The cancellation of the acquisition does not deter Intel from its long-term goals and aspirations in the semiconductor industry.
- Intel will pay a termination fee of $353 million to Tower as part of the agreement.
