In February 2022, Intel announced that it was acquiring Tower Semiconductor for $4.5 billion in cash. The acquisition of the Israeli company, specialized in the manufacture of analog integrated circuits used in the automotive, mobile, medical and aerospace industries, was a further step in the acceleration of Intel IDM 2. 0’s strategy of becoming a company with diversified foundry activities. But this project now seems to be falling through due to lack of Chinese approval. Reuters reports that China’s regulatory agency failed to approve the deal within the timeframe Intel and Tower Semiconductor had set to finalize the acquisition. This failure will force Intel Tower Semiconductor to pay a termination fee of $353 million.
What’s surprising in this story is that the deal apparently fell through without either party having attempted to extend the deadline to try and convince the Chinese regulator. Tower Semiconductor reports that the break-up was by mutual agreement:
After careful consideration and extensive discussions, and having received no indication regarding certain required regulatory approvals, both parties have agreed to terminate their merger agreement after passing the August 15, 2023 deadline. (Official Tower Semiconductor press release ).
Intel CEO Pat Gelsinger tried to salvage the situation by issuing a positive statement, certainly with a view to avoiding any disruption to the stock market.
We are executing well on our roadmap to regain leadership in transistor and power performance 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.