Intel abandons chipmaking acquisition after failing to secure Chinese approval

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It planned to acquire Tower for $5.4 billion.

. In a press release Intel blamed its “inability to obtain… the regulatory approvals required under the merger agreement” in a timely manner, adding that both parties agreed to terminate the deal. Intel had originally hoped to close the transaction in 12 months, but will now pay a termination fee of $353 million to Tower.that it was the Chinese authorities who hadn’t approve the deal ahead of the transaction’s deadline at midnight California time on August 15th.

The failure of the deal will be seen as a setback for Intel’s fledgling Intel Foundry Service division, which Intel hopes to build into a significant contract chip manufacturer to compete with rival TSMC. Although smaller than the likes of Intel and TSMC, Tower has expertise building specialized products like radio frequency chips, CMOS image sensors, and power management parts, andIn a statement, Intel CEO Pat Gelsinger struck a defiant tone.

“Since its launch in 2021, Intel Foundry Services has gained traction with customers and partners, and we have made significant advancements toward our goal of becoming the second-largest global external foundry by the end of the decade,” said IFS general manager Stuart Pann. Although the termination of the deal was officially announced today, the markets appear to have been expecting it to fall through for several months.notes that US-traded shares of Tower have declined 22 percent this year, bringing its share price well below what Intel agreed to purchase the company for.

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Intel scraps $5.4 billion acquisition of Tower Semiconductor after regulators fail to approve dealIntel first announced plans to buy Tower Semiconductor in 2022 for $5.4 billion, but is now terminating the deal saying it failed to get regulatory approval.
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