Intel to acquire Israeli chipmaker Tower Semiconductor for $5.4 billion

On Tuesday (Feb 15), Intel Corp signed a deal to buy Israeli chipmaker Tower Semiconductor for US$5.4 billion. Intel looks to further expand its manufacturing capacity and technology portfolio amid rising demand.

Intel is paying US$53 per Tower share which is much higher than Tower’s closing price of US$33.13 on Nasdaq on Monday. The transaction is expected to close in about 12 months and has already been unanimously approved by both boards.

It is expected to be immediately accretive to Intel’s non-GAAP earnings per share. Intel said it intends to fund the acquisition with cash from its balance sheet.

The deal is still subject to certain regulatory approvals including the approval from Tower’s shareholders.

Tower, the companies said, will remain independent until the deal closes. Tower will then be integrated into Intel Foundry Services (IFS).

Intel CEO Pat Gelsinger said in a statement Tuesday that “Tower’s specialty technology portfolio, geographic reach, deep customer relationships and services-first operations will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally. 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.

“With a rich history, Tower has built an incredible range of specialty analog foundry solutions based upon deep customer partnerships, with worldwide manufacturing capabilities. I could not be prouder of the company and of our talented and dedicated employees,” said Tower CEO Russell Ellwanger. “Together with Intel, we will drive new and meaningful growth opportunities and offer even greater value to our customers through a full suite of technology solutions and nodes and a greatly expanded global manufacturing footprint.”

CT Bureau