Intel drops $5.4 billion semiconductor tower deal. It’s a slam dunk strategy.
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Patrick Gelsinger, CEO of Intel, has made contract chip manufacturing an essential part of his strategy.
Ting Xin/Bloomberg
Intel has dropped its planned $5.4 billion acquisition of Israel
Semiconductor tower
.
It’s a setback for Intel’s plans to expand its chipmaking business.
Intel
(ticker: INTC) said on Wednesday that the deal, originally agreed for 2022, had been terminated due to delays in obtaining regulatory approval for the acquisition from Chinese authorities.
Intel will now have to pay a $353 million termination fee to Intel
Semiconductor tower
(TSEM). The most painful outcome, however, may be the blow to Intel’s plans to build out its chip business outsourcing via its plumbing 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 and the US
“We are executing well on our roadmap to restore transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem,” 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 adam.clark@barrons.com
