Components peripherals News
Intel To Buy Tower Semiconductor For $5.4B To Advance Foundry Strategy
Intel CEO Pat Gelsinger says the deal will advance its plan to manufacture chips for other companies by expanding its fab capacity and giving the semiconductor giant access to Tower’s specialty technologies, ‘extensive IP’ and electronic design automation partnerships.
Intel has reached an agreement to acquire Israeli chipmaker Tower Semiconductor for $5.4 billion, which it said would “significantly” advance its plan to manufacture chips for other companies.
The Santa Clara, Calif.-based company said the deal, announced early Tuesday morning, will expand Intel’s manufacturing capacity and give it access to Tower’s portfolio of specialty technologies, including radio frequency, power, silicon-germanium and industrial sensors. Intel will also gain access to Tower’s “extensive IP” and electronic design automation partnerships.
Intel CEO Pat Gelsinger sees the deal as an important way to advance the company’s IDM 2.0 strategy, an evolution of the chipmaker’s integrated device manufacturing model that involves Intel manufacturing its own chips and those made by other companies through Intel Foundry Services.
“Tower’s specialty technology portfolio, geographic reach, deep customer relationships and services-first operations will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally,” Gelsinger said in a statement.
“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 added.
Tower’s network of chip manufacturing plants, also known as fabs, will complement Intel’s own fab network in the U.S. and Asia, according to the company. This expanded manufacturing capacity, combined with Tower’s specialty technology, will allow Intel Foundry Services to offer the “broadest range of IP, services and capacity,” said Randhir Thakur, head of Intel’s foundry business.
“Tower and IFS together will provide a broad portfolio of foundry solutions at global scale to enable our customers’ ambitions,” he said in a statement.
The deal’s enterprise value represents the $53 per share Intel will pay to acquire Tower, which is publicly traded. The deal is expected to close in roughly 12 months, subject to regulatory approvals and other closing conditions. The deal has been approved by Intel’s and Tower’s boards.
Intel announced the deal hours after reports about the acquisition emerged Monday night.
Intel’s stock price was up roughly 0.8 percent Tuesday morning.