Intel has dropped its planned $5.4 billion acquisition of Israel
After the delay in obtaining Chinese approval. It’s a setback for Intel’s plans to expand its chipmaking business.
(ticker: INTC) said on Wednesday that the deal, originally agreed for 2022, had been terminated due to delays in obtaining regulatory approval.
China’s antitrust regulator, the State Administration for Market Regulation, had not approved the deal by Tuesday’s deadline. A merger triggers an antitrust review in China if two companies in a deal generate more than $117 million in annual revenue from the country.
Chinese regulators have not commented on the deal publicly, but it wasn’t the first time they failed to approve a semiconductor merger involving a US company.
QCOM has canceled its planned $44 billion purchase of the Dutch chipmaker
“With rising tensions and the multiplicity of subtle aggressive policies between Washington and China, a deal like Intel’s acquisition of Tower is becoming increasingly unlikely,” said Daniel Neumann, founder of technology research firm Futureum.
Intel will now have to pay a $353 million termination fee to Intel
(TSEM) under the terms of their merger agreement. The most painful outcome may be the blow to Intel’s plans to build out its chipmaking business on contracts for others via its foundry services unit.
Intel has prioritized its plumbing services unit under CEO Pat Gelsinger, with the goal of providing an on-premises alternative to
Taiwanese semiconductor industry
(TSM). The acquisition of Tower Semiconductor would have added people with long experience in the sector, along with manufacturing facilities in Israel, the United States and Japan.
Semiconductor tower manufacturers specialize in making chips using larger, older “nodes”—a classification of the size of the circuits on a chip. “The tower and legacy node specialization points would have given Intel a broader range of capabilities in its growing foundry strategy,” said Newman of Futrum.
Shares of US-listed Tower Semiconductor fell 8% to $31.07 Wednesday morning. Intel stock fell 1.1%.
“We’re executing well on our roadmap to restore transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem,” Intel’s Gelsinger said in a statement.
He added that Intel will continue to look for opportunities to work with Tower Semiconductor in the future.
Write to Adam Clark at firstname.lastname@example.org