Intel scraps $5.4 billion merger deal with Tower Semiconductors

Intel has announced that it will not be going ahead with the $5.4 billion acquisition of Tower Semiconductor, a contract manufacturer based out of Israel. The company says delays in obtaining necessary regulatory approvals, particularly in China, as the reason for the decision.

“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. Intel had hoped the acquisition would help expand its foundry business and better position it against competitors like TSMC from Taiwan.

Pat Gelsinger, the CEO of Intel, notes that the company is going forward with its foundry efforts, which he says is crucial to fully realising IDM 2.0’s potential. “We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs. Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future,” said Gelsinger.
In 2021, Intel established its foundry services as a separate business unit, investing $20 billion in constructing two Arizona factories. Additionally, the company unveiled its blueprint for constructing a colossal semiconductor facility in Ohio, which is intended to become the “biggest silicon manufacturing site globally.”
Under the merger agreement’s terms, Tower will receive a termination fee of $353 million from Intel. Gelsinger said, “Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.”