Intel Abandons Acquisition of Tower Semiconductor for $5.4 Billion
Intel has announced that it will not proceed with its planned acquisition of Tower Semiconductor for $5.4 billion, citing difficulties in obtaining the necessary regulatory approvals, particularly in China. Tower Semiconductor is known for producing a range of chips for clients in various industries. Intel had intended to acquire the company in order to enhance its foundry business and better compete with competitors such as TSMC from Taiwan.
Tower has seven production facilities (located in Israel, Italy, USA and Japan) that manufacture 6-inch, 8-inch and 12-inch wafers. Although the company doesn’t manufacture cutting-edge mobile and other processes, its customers don’t necessarily need the latest technology. Instead, Tower focuses on reliably manufacturing large quantities of chips for automakers, appliance manufacturers, the pharmaceutical industry and others.
Before Intel announced the Tower acquisition, Intel was said to be in talks to buy GlobalFoundries, a much larger chip maker and AMD spinoff, for about $30 billion. Intel launched its foundry services as a separate business unit as early as 2021 and committed $20 billion to the construction of two factories in Arizona. It also revealed plans to build a massive semiconductor plant in Ohio that will become “the largest silicon manufacturing facility on the planet.”
Intel said it will continue to execute on its roadmap to “maintain leadership in transistor performance and power performance through 2025,” with a goal of becoming the world’s second-largest external foundry by 2030. “Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.” As part of its merger agreement, Intel will pay Tower a termination fee of $353 million.
