Intel Purchase Of Tower Semiconductor Terminated, China Blamed

Intel’s multi billion dollar acquisition of Tower Semiconductor has been called off by both parties, after Chinese authorities reportedly failed to sign-off the deal.

Intel had revealed in February 2022 that it would acquire specialised chip manufacturing expert Tower Semiconductor for approximately $5.4 billion.

Tower Semiconductor specialises in manufacturing analogue integrated circuits (on 150mm, 200mm, and 300mm wafers) for a number of markets including infrastructure, automotive, mobile, medical, industrial, consumer and aerospace and defence.

Terminated acquisition

Tower is based in Israel and owns two manufacturing facilities (150mm and 200mm), two facilities in the US (200mm), and three in Japan (2 x 200mm and 1 x 300mm).

The deal would have added to Intel foundry service capabilities.

But over a year later and the deal is off, after Intel 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.”

In accordance with the terms of the merger agreement, Intel will pay a termination fee of $353 million to Tower.

“Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy,” said Pat Gelsinger, CEO of Intel. “Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.”

“Since its launch in 2021, Intel Foundry Services has gained traction with customers and partners, and we have made significant advancements toward our goal of becoming the second-largest global external foundry by the end of the decade,” said Stuart Pann, senior vice president and general manager of Intel Foundry Services (IFS).​

China responsible?

Tower and Intel did not provide details on the lack of timely regulatory approvals, but it seems to be down to Beijing.

Reuters reported that Intel had said it would drop the deal once their contract expired without regulatory approval from China.

“After careful consideration and thorough discussions and having received no indications regarding certain required regulatory approval, both parties have agreed to terminate their merger agreement having passed the 15 August 2023 outside date,” Tower Semiconductor was quoted by Reuters as saying in a statement.

According to Reuters, Intel CEO Pat Gelsinger had said he was trying to get the Tower deal approved by Chinese regulators and had visited the country as recently as last month to meet with government officials.

But this Chinese approval doesn’t seem to have happened, in a move that underscores the ongoing tensions between Beijing and the United States.

Reuters highlighted how US-based DuPont De Nemours also scrapped its $5.2 billion deal to buy US-based electronics materials maker Rogers in 2022, after delays in securing approval from Chinese regulators.