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Intel Pulls Plug on Chip Deal With Israel’s Tower Semiconductor
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August 25, 2023 News

 

Written by: Martin Dale Bolima, Tech Journalist, AOPG.

Intel’s supposed acquisition of Israeli chipmaker Tower Semiconductor is officially dead in the water, according to reports from Reuters, CNN, and the Financial Times.

This developed after the planned transaction, first reported in February 2022, failed to secure the necessary approvals from a still unidentified jurisdiction, which many experts claim to be China. Because of this, Intel was left with no choice but to back out of the proposed USD $5.4 billion deal that would have enhanced Intel’s chipmaking portfolio.

Intel CEO Pat Gelsinger had previously articulated difficulties in securing approval from Chinese regulators, even admitting that he had travelled to the Mainland to “move things forward.”

“As part of my recent trip to China, we continue to work hard to complete the Tower [Semiconductor] acquisition,” Gelsinger said previously.

Such admission has led many to believe that China had not given its approval on the deal, leading to its eventual termination. According to law firms advising global businesses, companies looking to merge need Chinese regulators to approve the proposed merger if they make a certain amount of revenue from China—which is exactly the case with Intel.

If Chinese regulators did, indeed, withhold approval of the said deal, then it should not come as a surprise given the tensions between China and the US over the latter’s decision in October to restrict the former’s access to critical technology, especially those coming from the US.

Regardless of the true reasons for the deal’s hang-ups, its termination comes at a time when Intel continues to struggle with the downtrodden economy, which has forced the company to cut costs significantly. With the merger scrapped, Intel’s shares nosedived in the first few days since the news was announced, while those of Tower Semiconductor also tumbled.

Despite the terminated merger, both Intel and Tower Semiconductor will, according to Gelsinger, continue “to look for opportunities to work together in the future”—more so now that Intel is investing significantly in foundries or factories that manufacture chips for other companies.

Sources:

https://edition.cnn.com/2023/08/17/business/intel-tower-semiconductor-deal-china-block-intl-hnk/index.html

https://www.reuters.com/technology/intel-walk-away-54-bln-acquisition-tower-semiconductor-sources-2023-08-16/

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