Intel has announced that it will not be moving forward with the $5.4 billion acquisition of Tower Semiconductor, a contract manufacturer based in Israel. The decision is due to delays in obtaining necessary regulatory approvals, particularly in China.
“Intel Corporation today announced that it has mutually agreed with Tower Semiconductor to terminate its previously disclosed agreement to acquire Tower due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement,” said Intel in a press statement.
In February of last year, Intel announced its plan to acquire the Israeli chip manufacturer for $5.4 billion. The acquisition was aimed at expanding Intel’s foundry business and positioning it against competitors like TSMC from Taiwan.
Pat Gelsinger, the CEO of Intel, stated that the company will continue its foundry efforts, which are crucial to fully realizing IDM 2.0’s potential. Gelsinger expressed respect for Tower and mentioned the possibility of future collaborations.
In 2021, Intel established its foundry services as a separate business unit and invested $20 billion in constructing two factories in Arizona. The company also unveiled plans for a large semiconductor facility in Ohio, intended to be the largest silicon manufacturing site globally.
Under the terms of the merger agreement, Tower will receive a termination fee of $353 million from Intel. Gelsinger reiterated the company’s respect for Tower and expressed a willingness to explore future opportunities for collaboration.
Unique Perspective:
Intel’s decision to abandon the acquisition of Tower Semiconductors highlights the challenges faced by companies seeking to expand through mergers and acquisitions. Regulatory hurdles, especially in key markets like China, can significantly impact the timeline and feasibility of such deals. However, Intel remains committed to its foundry business and continues to invest in expanding its manufacturing capabilities. The termination fee provided to Tower demonstrates Intel’s respect for the company and leaves the door open for potential future collaborations. As the semiconductor industry continues to evolve, strategic partnerships and investments will play a vital role in shaping the competitive landscape.
