Intel Corp yesterday said that it is walking away from its attempt to acquire Tower Semiconductor Ltd, abandoning a US$5.4 billion deal after failing to win regulatory approval in time.
Intel has mutually agreed with Tower Semiconductor to terminate the agreement reached in February last year, it said in a statement.
The purchase of the Israeli company was the keystone of Intel chief executive officer Pat Gelsinger’s plan to get into a faster-growing part of the semiconductor industry, the foundry market dominated by Taiwan Semiconductor Manufacturing Co (TSMC, 台積電).
Photo: Reuters
Tower has a relatively small presence in that area — where companies make chips for customers on a contract basis — but has expertise and customers that Intel lacks.
“We will continue to look for opportunities to work together” with Tower in the future, Gelsinger said in the statement.
Intel is to pay Tower a termination fee of US$353 million.
When the transaction was announced, Intel said that it would take “about 12 months.”
The chipmaker had offered US$53 a share to acquire Tower Semiconductor for about US$5.4 billion.
As of October last year, Intel said that it was targeting the first quarter of this year, but then in March warned that the date might slip into the second quarter.
The deadline for completing the transaction was Tuesday at midnight in California.
Increasing tension between China and the US has made securing approval for transactions that require the signoff from regulators in Beijing and Washington increasingly difficult, particularly those involving semiconductors, a key area of friction in the relationship.
While Tower is a fraction of the size of Intel and TSMC in terms of revenue, it is active in older types of production-making chips for big customers such as Broadcom Inc.
Although those chips do not require the state-of-the-art production techniques that an Intel or Nvidia Corp processor demands, many new types of chips for markets such as electric vehicles can be made in older plants.
Sanford C. Bernstein analyst Stacy Rasgon said that the deal’s failure would be a setback for Intel.
“A failed deal does seem modestly disappointing for the prospects of Intel’s foundry efforts,” Rasgon wrote in a research note. “Overall Intel’s foundry efforts were never going to be easy even with Tower, but now may prove to be even more challenging without.”
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