Beijing's silent treatment topples Tower Semiconductor merger with Intel

Intel's planned $5.4 cardinal bargain of Israeli spot biz Tower Semiconductor has fallen done aft nan vendor grounded to get regulatory support from China wrong nan clip framework for nan woody to close.

The incident is being seen arsenic payback from Beijing for US semiconductor sanctions against China.

The 2 companies announced 19 months agone that they'd entered into a definitive statement for Intel to get Tower Semiconductor, which specializes successful manufacturing high-value analog semiconductor components for customers worldwide.

However, arsenic pinch galore mergers, support was required from nan regulatory bodies successful various territories, and it is understood nan projected waste was fixed nan go-ahead everyplace isolated from for China.

The transaction was primitively expected to adjacent wrong 12 months, but nan brace extended nan deadline while awaiting support from China's State Administration for Market Regulation (SAMR), first until June and past again to August 15.

$353M later...

Now it appears that alternatively than widen nan deadline further, Intel and Tower Semiconductor person mutually agreed to telephone nan full woody off. This will not travel without costs – successful accordance pinch nan position of nan merger agreement, Intel is required to salary Tower a termination interest of $353 million, which wholly wipes retired nan $232 cardinal gross Intel Foundry Services (IFS) reported for for Q2 2023. The section only officially opened for business successful 2021.

In a statement, Tower Semiconductor said nan determination followed observant information and discussions aft nan companies had received "no indications regarding definite required regulatory approval," and arsenic a consequence, some agreed to terminate their merger statement erstwhile nan August 15 day was reached.

At nan clip of its first announcement, nan acquisition was billed arsenic a "highly complementary transaction" that would play a cardinal domiciled successful Intel's plans to go a awesome supplier of foundry services and semiconductor manufacturing capacity globally.

Stuart Pann, Intel elder vice president and wide head for IFS, claimed coming nan institution had nevertheless made important advancements toward becoming nan 2nd largest world outer foundry by 2030.

"We are building a differentiated customer worth proposition arsenic nan world's first unfastened strategy foundry, pinch nan exertion portfolio and manufacturing expertise that includes packaging, chiplet standards and software, going beyond accepted wafer manufacturing," Pann said.

But Omdia Principal Analyst Manoj Sukumaran told america he believed nan woody falling done would beryllium a rustle to Intel's modulation to go a foundry services provider.

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"Tower is an established foundry work supplier pinch galore cardinal customers, IPs, EDA partnerships and expertise successful specialty technologies for RF, Power and business sensors. Intel will beryllium losing retired not conscionable their capacity, customers, and technology, but besides their process and expertise successful offering services to fabless companies which I judge would person been very important for nan occurrence of IFS," he said.

The 2 companies did not explicitly authorities it, but nan evident deficiency of engagement from nan Beijing authorities connected approving aliases rejecting nan merger is apt caused by nan existent sour relations betwixt nan US and China complete semiconductor technology.

It isn't each bad news for IFS. Intel announced a business pinch Synopsys this week that will spot designs specified arsenic interface technologies disposable for inclusion successful spot designs by Intel foundry customers.

The move followed a akin deal pinch Arm a fewer months agone that makes it easier for Arm licensees to person their system-on-chip (SoC) products manufactured astatine an Intel fab utilizing nan upcoming Intel 18A process node. ®