Intel to abandon $5.4 billion Tower Semiconductor acquisition

Intel Corp will withdraw from its $5.4 billion agreement to acquire Israeli contract chipmaker Tower Semiconductor Ltd as ir contractual period concludes today, as per sources familiar with matter.

acquisition, inked by Intel in February 2022, hit a roblock when Chinese regulatory approval, mandated by agreement with Tower Semiconductor, was not secured, sources revealed.

Intel has no intentions of pursuing an extension of contract and will inste remunerate Tower Semiconductor a break-up fee of $353 million to terminate deal, according to sources, who requested anonymity prior to official announcement.

Both Intel and Tower Semiconductor opted not to provide comments. Representatives of China's antitrust regulator, State ministration for Market Regulation, were unavailable for immediate comment.

Tensions between US and China

This development highlights extension of tensions between United States and China into realm of corporate transactions, particularly concerning technology companies. Ongoing disputes encompass matters such as tre, intellectual property, and future of Taiwan.

A parallel instance emerged last year when DuPont De Nemours Inc scrapped its $5.2 billion deal to acquire electronics materials manufacturer Rogers Corp due to delays in securing approval from Chinese regulatory authorities.

Intel's CEO, Pat Gelsinger, h been striving to secure Chinese regulatory consent for Tower Semiconductor deal. Gelsinger's efforts included a recent visit to China to meet with government officials.

Will continue to manufacture chips for ors: Intel

However, Gelsinger concurrently emphasised that Intel was investing significantly in its foundry business, responsible for manufacturing chips for or entities, regardless of outcome of Tower Semiconductor deal.

In June, Israeli Prime Minister Benjamin Netanyahu unveiled Intel's commitment to invest $25 billion in a novel factory in Israel, marking country's most substantial international investment to date.

Intel to invest $25 billion in Israel | Image credit: Unsplash

Anticipations for Tower Semiconductor deal h waned among investors. Consequently, Tower Semiconductor's Nasdaq-listed shares concluded tring at $33.78 on Tuesday, reflecting a notable disparity from deal price of $53 per share.

During second quarter, Intel's foundry segment reported revenue of $232 million, representing a notable increase from $57 million in previous year. This surge was driven by vancements relative to competitors, including industry leer Taiwan Semiconductor Manufacturing Co.

(With Reuters inputs)