Today: Feb 12, 2025

Intel Abandons $5.4 Billion Acquisition of Towel Semiconductor Amid China Hurdles

1 year ago

Intel’s intended acquisition of Tower Semiconductor, valued at $5.4 billion and announced in February 2022, required the approval of Chinese regulators by August 15. However, the delay in obtaining the necessary nod from Chinese competition authorities forced Intel to abandon the deal. This missed opportunity means Intel will lose out on acquiring clients, expertise, and semiconductor foundries in Japan, the United States, and Israel.

Why it matters: Intel’s planned acquisition of Tower Semiconductor faced challenges as it required approval from Chinese authorities, which was not granted within the stipulated timeframe. This setback is a significant blow to Intel’s strategic goals of expanding its capabilities and clientele. The failed deal also comes with a hefty compensation cost for Intel.

In the wake of the failed acquisition, Intel will have to pay a breakup fee of $353 million, as reported by sources close to the matter.

Pat Gelsinger, Intel’s new CEO, attempted to influence Chinese officials in favor of the deal during a visit to Beijing last month.

The intricate dynamics of trade tensions and geopolitical pressures often limit maneuverability for U.S. companies when seeking approvals from Beijing.

Despite generating $17.1 billion in revenue from its Chinese operations last year, Intel’s acquisition of Tower Semiconductor could have transformed the company into a more formidable competitor for Chinese counterparts such as SMIC and Hua Hong.

This move would have further solidified Intel’s presence in Israel, where it already operates a chip manufacturing facility and multiple development centers.

Intel’s Collaborative Ventures

Towel Semiconductor was already a collaborator with Intel in its Intel Foundry Services program, which has been open to third parties since 2021.

Through partnerships like this, Intel’s business model aimed to compete with giants like TSMC. The acquisition of Towel Semiconductor was intended to deepen this collaboration and enhance Intel’s chip production capabilities.

In the U.S., Intel has also invested $20 billion alongside its former rival IBM to regain a technological edge in chip production. This endeavor focuses on research and development (R&D) and includes plans for two new chip manufacturing plants, complementing existing facilities in Israel and Ireland.

Towel Semiconductor’s existing manufacturing facilities were not on par with the latest chip production requirements but were adequate to meet demand, particularly from automotive manufacturers.

In June, Israeli Prime Minister Benjamin Netanyahu revealed Intel’s plan to invest $25 billion in a new chip manufacturing plant. Chip production at this new facility is projected to commence in 2027, adding another layer of complexity to Intel’s global strategy.

 

Intel Corporation in the United Kingdom

Intel Corporation has a significant presence and a history of fostering technological advancement and collaboration within the United Kingdom.

With a focus on research, development, and innovation, Intel plays a crucial role in shaping the country’s tech landscape and contributing to its digital future.

Intel operates multiple research and development centers in the UK, where teams of engineers, scientists, and experts collaborate to push the boundaries of technology. These centers focus on various areas, including:

  1. AI and Machine Learning: Intel’s research in the UK contributes to the advancement of artificial intelligence (AI) and machine learning technologies, driving innovation in areas like deep learning algorithms and neural network architectures.
  2. Wireless Communication: The company’s research efforts also extend to wireless communication technologies, aiming to enhance connectivity solutions and develop next-generation wireless standards.
  3. High-Performance Computing: Intel’s commitment to high-performance computing (HPC) is evident through its UK centers, contributing to breakthroughs in areas such as data analytics, simulations, and scientific research.

Collaboration with Academic Institutions: Intel collaborates closely with renowned academic institutions across the UK to foster innovation and provide support for cutting-edge research.

These collaborations often lead to joint projects, research papers, and advancements in various fields of technology.

Supporting Startups and Entrepreneurs: Intel engages with the UK’s vibrant startup ecosystem through various programs, initiatives, and partnerships.

By providing resources, mentorship, and access to technology, Intel contributes to the growth and success of startups and entrepreneurs in the country.

Job Creation and Economic Impact: Intel’s activities in the UK have a significant impact on the local economy, contributing to job creation, skills development, and technological expertise.

The company’s presence also contributes to the UK’s position as a hub for technological innovation and research.

Investment in Future Technologies: As the tech industry evolves, Intel remains at the forefront of emerging technologies.

The company’s investments in areas such as quantum computing, advanced manufacturing processes, and sustainable technology underscore its commitment to shaping the future of technology in the UK and globally.

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