Buy more to make more: Intel acquires Tower semiconductors

Intel has entered into an agreement to scoop up Israel-based Tower Semiconductors for US$5.4 billion as it continues its quest to boost its foundry capacity, the company announced on Feb. 15.

The deal will see Intel pay US$53 per share, $6 over the Tower’s closing price on Feb. 14. Intel intends to fund the acquisition with cash from the balance sheet.

News of the acquisition began circulating late Feb 14, launching Tower’s share price from US$33.09 to a peak of $50.01, a 51 per cent increase. Intel’s share price remained relatively stable at US$48.44, up 1.81 per cent from the previous day’s close.

Tower Semiconductor specializes in analog integrated circuits. Its customers include Broadcom, Panasonic, Samsung, Intel, and others. It operates seven manufacturing facilities distributed across Israel, U.S., and through its partnership with Panasonic Semiconductor Solutions in Japan. Its products include technologies used in radio, power management, and image sensor circuitries.

“This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes – unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors,” said Pat Gelsinger, Intel chief executive officer, in the press release, noting Tower’s vast technology portfolio and production capabilities.

In its press release, Intel claims the acquisition significantly advances its integrated device manufacturer (IDM) 2.0 strategy and that it now offers one of the industry’s broadest portfolios of differentiated technology.

The transaction will be immediately added to Intel’s non-GAAP earnings per share and is expected to close in about 12 months. Intel Foundry Services (IFS) and Tower Semiconductor will remain as independents until the deal closes.

Intel has been making major investments in spinning up new semiconductor fabrication plants in Europe and the U.S. Most recently, the company announced two new fabs in Ohio in January 2022, representing a $20 billion investment.

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