Intel has dropped its planned $5.4 billion acquisition of Israel’s
Tower Semiconductor.
It’s a setback to Intel’s plans to expand its chip-manufacturing business.
Intel
(ticker: INTC) said Wednesday the deal, originally agreed in 2022, had been terminated due to delays in getting regulatory approval. Chinese regulators hadn’t approved the deal by Tuesday’s deadline.
Intel will now have to pay a $353 million termination fee to
Tower Semiconductor
(TSEM). However, the more painful consequence could be the blow to Intel’s plans to build up its business making chips on contract for others via its Foundry Services unit.
Intel has prioritized its Foundry Services unit under CEO Pat Gelsinger, aiming to provide a domestic alternative to
Taiwan Semiconductor Manufacturing
(TSM). The acquisition of Tower Semiconductor would have added people with long experience in the sector along with manufacturing facilities in Israel, the U.S. and Japan.
Tower Semiconductor’s U.S.-listed shares were down 9.8% in premarket trading. Intel stock was up 0.5%.
“We are executing well on our road map to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem,” Intel’s Gelsinger said in a statement.
He added that Intel would continue to look for opportunities to work with Tower Semiconductor in the future.
Write to Adam Clark at [email protected]
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