Intel is to buy Israel’s specialty foundry Tower Semiconductor in a deal worth US$5.4 billion, writes Peter Clarke.

The deal boosts Intel’s position in foundry chip supply although Tower does not compete at the leading-edge but instead has a large portfolio of differentiated technologies. It makes analog and mixed-signal circuits, RF front-ends, power devices, CMOS image sensors, non-imaging sensors and MEMS.

Tower has two wafer fabs in Israel (150mm and 200mm), two in the US (200mm) and three facilities in Japan (two 200mm and one 300mm). It owns the Japanese fabs through its 51 percent holding in TPSCo. Tower has also just begun sharing a 300mm manufacturing facility being established in Italy with STMicroelectronics. Intel’s acquisition comes at a time when chip shortages have restricted the production of a wide variety of electronics goods, from smartphones to automobiles. Chip manufacturers have been increasing selling prices where they can.

Intel established Intel Foundry Services (IFS) in March 2021 saying it would become a major provider of US and Europe-based foundry capacity to serve customers globally. It is not clear whether Intel would regard Tower as supporting the European element of that intention and may fall foul of the requirements for new capacity in the European CHIPS Act.

“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. We look forward to being an integral part of Intel’s foundry offering,” said Russell Ellwanger, Tower CEO, in a statement.

The deal is expected to close within approximately 12 months. It has been approved by both boards of directors but remains subject to regulatory approvals and customary closing conditions, including the approval of Tower’s shareholders.

Intel said that after the deal closes Tower would be integrated into Intel Foundry Services.

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