Intel to cancel Tower Semiconductor acquisition - reports

Tower Semiconductor fab  credit: Shlomi Yosef
Tower Semiconductor fab credit: Shlomi Yosef

The completion date for Intel's $5.4 billion deal to buy Israel's Tower Semiconductor has passed, but the US chip giant has failed to obtain regulatory approval in China.

Almost a year and a half have gone by since it was reported that US microchips giant Intel would buy Israel’s Tower Semiconductor (Nasdaq: TSEM) at a valuation of $5.4 billion. The timetable for completion of the deal ran out yesterday, and according to various reports Intel will withdraw from it after failing to obtain the necessary regulatory approvals in China.

Intel was to have acquired Migdal Ha’emek based Tower Semiconductor in order to expand its production capacity and extend its foothold in a new portfolio of products. Tower Semiconductor specializes in producing analog chips - fairly simple chips used as electronic sensors in a variety of installations, such as vehicles, medical imaging devices, and cameras.

At the time of the deal, Intel said that Tower Semiconductor’s unique RF technology, its design and development partnerships, its intellectual property, and its geographical spread, fitted Intel’s business strategy, and that it had therefore agreed to pay over $5 billion for the company.

Completion of the deal has, however, been deferred time after time, and in the meanwhile Tower Semiconductor’s share price has fallen below the deal price, which led many analysts to say that they did not believe that the deal would be completed in the end. At yesterday's closing price, Tower Semiconductor had a market cap of $3.84 billion. 

If Intel does pull out, then under the terms of the deal it will be required to pay Tower Semiconductor $353 million compensation.

Published by Globes, Israel business news - - on August 16, 2023.

© Copyright of Globes Publisher Itonut (1983) Ltd., 2023.

Tower Semiconductor fab  credit: Shlomi Yosef
Tower Semiconductor fab credit: Shlomi Yosef
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