intel corporation announced today that has not been able to formalize the purchase agreement from the Israeli chip maker tower semiconductor. It seems that the trade war between the United States and China has cost Intel quite a bit. Basically, the acquisition contract expired yesterday because have not received regulatory approval from China. It must be remembered that this agreement was valued at 5.4 billion dollars.
For brief context, Intel announced its intention to purchase Tower Semiconductor in February 2022. Without Chinese regulators’ approval for the acquisition, the contract has expired. Intel does not plan to negotiate a contract extension. Because of that, will pay Tower Semiconductor a $353 million breakage feethe sources added.
Without the purchase of Tower Semiconductor, Intel loses the opportunity to increase its production of chips
Both Intel and Tower Semiconductor declined to comment. The representatives of the State Administration for Market Regulation, China’s antitrust regulator, have also not commented on the matter. What we do know is that Intel’s own CEO, Pat Gelsinger, had declared that was trying to get approval from Chinese regulators for the purchase of Tower. To that end, he had even visited the country last month to meet with government officials.
You have to remember in March of this year, Intel had announced a delay in the acquisition of Tower Semiconductor. The move is the same as the cancellation of the deal, wait for regulatory approval from China. After announcing that the acquisition will not be completed, Tower Semiconductor shares fell. Although each share had a cost of 53 dollars, when the information was released, the value of these shares fell to $33.78.
“Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to make progress in all facets of our strategy,” said Intel CEO Pat Gelsinger.
“We are executing well on our roadmap to regain leadership in transistor performance and power efficiency by 2025, building momentum with customers and the wider ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs. Our Our respect for Tower has only grown throughout this process, and we will continue to look for opportunities to work together in the future.”
Intel Foundry Services will be without the support of Taiwan Semiconductor
The cancellation of this agreement is a severe setback for an Intel that wants to gain leadership in the manufacture of high-performance chips. Luckily for the company, for now nothing is going wrong. A clear example is that during the second quarter of 2023, IFS revenue increased by more than 300% compared to the same period of 2022.
“Since its launch in 2021, Intel Foundry Services has been gaining traction with customers and partners, and we’ve made significant progress toward our goal of becoming the second largest outside foundry in the world by the end of the decade,” said Stuart Pann, senior vice president and CEO of Intel Foundry Services.
“We are building a differentiated customer value proposition as the world’s first open system foundry, with the technology portfolio and manufacturing expertise that includes packaging, chip standards and software, going beyond traditional wafer manufacturing. .”