Intel has agreed to acquire Tower Semiconductor Ltd for about $5.4 billion, part of chief executive Pat Gelsinger’s push into the outsourced chip-manufacturing business.
Gelsinger, who took the CEO job a year ago, is betting he can compete with Taiwan Semiconductor Manufacturing Co in the chip-foundry market - the contract manufacturing of semiconductors for other companies. His comeback plan for Intel involves modernising its factories and building new ones aimed at restoring its leadership in chip technology.
Analysts at KeyBanc Capital Markets called the deal “moderately positive” for Intel. Since Taiwan Semiconductor is a specialty foundry, it’s unclear whether the acquisition will help Intel expand to the same volumes and compete with Samsung and TSMC on mainstream process technologies. On a conference call with analysts to discuss the deal, Gelsinger said Tower complemented Intel’s military contracts. Intel also plans to build on Tower’s existing partnership with STMicroelectronics, Gelsinger said.
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