The American semiconductor major said that the parties have mutually agreed to terminate the deal owing to their failure in getting the mandated regulatory approvals in a timely manner, and as a result, a termination fee of $353m will be paid to Tower Semiconductor
Intel and Tower Semiconductor mutually agree to terminate their merger agreement. (Credit: Intel Corporation)
Intel has scrapped the previously announced $5.4bn acquisition of Israeli foundry Tower Semiconductor owing to regulatory hurdles.
The American semiconductor company said that the parties have mutually agreed to terminate the deal owing to their failure in getting the necessary regulatory approvals in a timely manner. The merger agreement between the companies was signed in February 2022.
In accordance with the conditions outlined in the merger agreement, and as part of the decision to cancel the merger, Intel will provide a termination fee of $353m to Tower Semiconductor.
Intel did not manage to secure regulatory approval for the deal from China within the expected timeframe, reported Reuters, citing individuals familiar with the situation.
According to the terms of the agreement, Intel was to pay $53 per share in cash to the shareholders of Tower Semiconductor, which is listed on Nasdaq.
Had the deal closed, Tower Semiconductor was expected to be integrated into Intel Foundry Services.
The acquisition of the Israeli semiconductor firm was anticipated to help Intel advance its IDM 2.0 strategy considerably.
Intel said that it continues to advance plans to build a world-class system foundry as part of IDM 2.0. The strategy was framed to further grow the American company’s manufacturing capacity, global footprint, and technology portfolio to meet the high industry demand for semiconductors.
Intel CEO Pat Gelsinger said: “Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy.
“We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs.
“Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.”
In June 2023, Intel signed an agreement in principle with the Israeli Finance Ministry to make an investment of NIS90bn ($24bn) in a chip manufacturing facility in Israel.