Regulatory hurdles compel Intel, Tower Semiconductor to scrap $5.4bn deal

Intel Corporation has confirmed its decision to abort the planned $5.4 billion acquisition of Tower Semiconductor (Nasdaq: TSEM), pointing to unexpected delays in obtaining necessary regulatory approvals. Originating from a merger agreement formalized on February 15, 2022, Intel now owes Tower Semiconductor a hefty termination fee amounting to $353 million as per the stipulated terms.

The ambitious all-cash acquisition was conceived as a strategic expansion of Intel’s IDM 2.0 vision. Tower Semiconductor, an esteemed analog semiconductor solutions foundry, with dual listings on the Nasdaq and the Tel Aviv Stock Exchange, presented a lucrative opportunity for Intel. Shareholders of the Israeli enterprise, renowned for pioneering innovations in radio frequency (RF), high-performance analog (HPA), power management integration, and numerous other advanced technologies, were earlier promised $53 per share in cash. Post-merger, Tower Semiconductor was slated to seamlessly integrate into Intel Foundry Services, further enriching Intel’s expansive foundry business blueprint.

Regulatory hurdles push Intel and Tower Semiconductor to terminate $5.4bn deal. Photo courtesy of Intel Corporation.

Complementing Intel’s vision, Tower Semiconductor flaunts a robust infrastructure, boasting seven semiconductor fabrication units; two in Israel, two in the U.S., and three in Japan, the latter being a collaborative initiative with Panasonic Semiconductor Solutions.

Reacting to the deal’s unexpected termination, Intel’s CEO, Pat Gelsinger, reiterated the company’s unwavering commitment to the IDM 2.0 strategy, emphasizing that their trajectory towards achieving transistor performance leadership by 2025 remains unchanged. Expressing admiration for Tower Semiconductor, he voiced optimism for potential collaborations in the future. Stuart Pann, the senior vice president and GM of Intel Foundry Services, underlined the impressive strides Intel Foundry Services has made since its 2021 inception, with a vision to evolve into the world’s foremost open system foundry, transcending traditional wafer manufacturing paradigms.