Intel ends $5.4 billion deal to buy Tower Semiconductor
Aug. 16 (UPI) -- Intel Wednesday announced termination of a $5.4 billion bid to acquire Tower Semiconductor. The company said its decision is due to inability to obtain regulator approvals in a timely manner.
Intel's statement said it will pay a termination fee of $353 million to Tower in to end the deal. Intel described it as a mutual agreement to end the proposed transaction.
"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," Intel CEO Pat Gelsinger said in a statement.
Despite the setback in acquiring Tower, Intel said its plan to "regain transistor performance and power performance leadership by 2025" is going well.
"Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future," Gelsingwer's statement added.
The multibillion-dollar proposal to buy Tower was first announced in February 2022 when Intel explained it was buying the Israeli chip company to expand its manufacturing capacity "to address unprecedented industry demand."
In June Intel revealed a $33 billion plan to build two semiconductor plants in Magdeburg, Germany. Germany's government said it is the largest foreign direct investment in German history.
The global semiconductor shortage has prompted western nations to increase investments in domestic chip manufacturing.
Taiwan's TSMC has plans to build two semiconductor chip plants in Arizona, but has delayed production on one of them from a planned late 2024 start to 2025 due to a skilled worker shortage.
In July TSMC said it would invest $2.87 billion to build a new chip factory in Taiwan.
Recognizing the global chip shortage and the vulnerability of depending on Taiwan and Korea for chips, President Joe Biden signed the CHIPS Act into law in August 2022 to encourage domestic chip manufacturing.
It provides $52 billion in subsidies for chip manufacturers building plants in the United States.
Biden signed an executive order Aug. 25, 2022, as a follow-up to the CHIPS Act designed to bolster U.S. chip supply chains.
According to the White House, the CHIPs Act provides $280 billion overall to help fund the entire semiconductor supply chain.
Biden said it would create 1 million jobs.
In 2021, Intel launched Intel Foundry Services aimed at creating a world-class system foundry, according to the company.
"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 IFS General Manager Stuart Pann in a statement.
