Intel’s planned acquisition of Tower Semiconductor has failed, after the US chipmaker was unable to get the necessary regulatory approval.
The abandonment of the $5.4B deal is a setback to Intel’s hopes of competing with Apple chipmaker TSMC …
Why Intel wanted Tower Semiconductor
Intel had for a long time been left far behind by TSMC when it came to ever smaller chip-making processes. This was one of the reasons for Apple switching Macs from Intel processors to Apple Silicon ones.
Tower Semiconductor would have been no help there, as the Israeli company produces chips using older and larger processes.
But TSMC has another big advantage over Intel: its success in winning contracts to make chips designed by client companies. While Apple’s business requires the latest tech, many companies don’t. Most of the chips used by car manufacturers, for example, use much older processes.
Tower has been extremely successful in winning custom chip contracts, and Intel’s grand plan was to combine Tower’s experience and client list with its own less advanced foundries in order to move into this lucrative slice of the market.
Tower acquisition now called off
The deal required regulator approval in both the US and China. That’s a tough ask at a time when neither government is inclined to do anything that might help the economy of the other, and it was widely predicted that the deal was likely to fail for this reason.
Bloomberg reports that China has indeed refused to sign-off.
Intel Corp. said it’s walking away from its attempt to acquire Tower Semiconductor Ltd., abandoning a $5.4 billion deal after failing to win regulatory approval in time […]
Sanford C. Bernstein analyst Stacy Rasgon said: “A failed deal does seem modestly disappointing for the prospects of Intel’s foundry efforts,” he wrote in a research note after Bloomberg’s story. “Overall Intel’s foundry efforts were never going to be easy even with Tower, but now may prove to be even more challenging without.”
Intel said afterward that it still hopes to work closely with Tower.
Photo: Tower Semiconductor/CC4.0
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