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Intel Pulls out of Tower Purchase
The tech giant said in a statement it is scrapping the planned deal “due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement.”
The company known colloquially as “Mr. Chips” will pay a termination fee of $353 million to Tower.
Intel announced intentions to buy Tower — a contract chipmaker that manufactures semiconductors for other companies — in February 2022 for $5.4 billion.
Tower Semiconductor’s Israel-listed shares were down 8% early Wednesday morning. They opened in New York at $33.78. Shares in INTC faltered 37 cents, or 1.1%, to $34.40
Reuters reported Tuesday that Intel did not secure approval for the deal from the Chinese authorities before a crucial deadline passed. Chinese authorities have not publicly communicated approving the purchase.
The termination of the deal is a potential blow to Intel which, under CEO Pat Gelsinger, has pledged to boost its foundry business. Foundries refer to companies that manufacture semiconductors.
Over the years, Intel lost its lead in chipmaking to Taiwanese firm TSMC and South Korea’s Samsung and is now trying to catch up. The deal would have given Intel a foothold in the specialty technologies on which Tower focuses, like radio frequency and industrial sensors.
