Intel confirms acquisition of Tower Semiconductor for $5.4bnVish Gainon February 15, 2022 at 11:01 Silicon RepublicSilicon Republic

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Intel has confirmed the acquisition of Tower Semiconductor, an Israeli chipmaker, for $5.4bn today (15 February).

The deal involves Intel buying all Tower shares for $53 each, valuing the analog semiconductor foundry at $5.4bn. As of Monday, Tower had a market capitalisation of $3.6bn, according to Reuters, with initial rumours estimating the deal to be closer to $6bn.

Intel said the deal “significantly advances” its new strategy for integrated device manufacturing, dubbed ‘IDM 2.0’, which involves the combination of its existing internal factory network with third-party capacity as well as new Intel foundry services.

CEO Pat Gelsinger said that the Tower portfolio of specialty technology and its geographic reach “will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally”.

“This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes – unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors,” he said.

Intel, which reported the highest revenue in the company’s 53-year history last month, has been ramping up its foundry business in recent years to compete in a highly competitive space led by Taiwan Semiconductor Manufacturing Company (TSMC), the world’s largest chipmaker.

In March, Intel established its own foundry business, Intel Foundry Services, to help meet the growing global demand for semiconductors amid a chip shortage that continues to disrupt supply chains across a wide range of technology industries.

Last week, Intel even launched a $1bn fund aimed at early-stage start-ups and established businesses developing tech for the foundry space.

Its acquisition of Tower will give Intel an advantage in high-growth markets such as mobile, automotive and power – all three areas Tower specialises and serves in. It will also expand Intel’s reach in the US and Asia, where Tower operates foundries, along with growth opportunities in markets such as Israel, Texas, Italy and Japan.

Tower CEO Russell Ellwanger expressed his excitement at joining Intel’s foundry business, where it brings to the table “a rich history” of expertise in specialty analog foundry technologies with “worldwide manufacturing capabilities”.

“Together with Intel, we will drive new and meaningful growth opportunities and offer even greater value to our customers through a full suite of technology solutions and nodes and a greatly expanded global manufacturing footprint,” he said.

Last month, Intel announced plans to invest billions in creating a new chip-making facility in the US state of Ohio which could become the world’s largest semiconductor manufacturing site by the end of the decade.

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