Intel announced the deal in February 2022 and hoped it would help scale its foundry services
Intel has terminated the $5.4 billion deal to acquire Israel-based chip company Tower Semiconductor, citing regulatory hurdles. The deal, announced in February 2022, was intended to help scale Intel’s foundry services and was expected to close within 12 months of being made public.
“After careful consideration and thorough discussions and having received no indications regarding certain required regulatory approval, both parties have agreed to terminate their merger agreement having passed the August 15, 2023 outside date,” Tower Semiconductor said in a statement.
Therefore, despite the unanimous approval by the Intel and Tower boards of directors, the former must now pay the latter a termination fee of $353 million in accordance with terms of the agreement. And while it has not been disclosed which regulatory bodies the company has been wrestling with, Reuters reported challenges with Chinese authorities.
Intel has been racing to spin up its Intel Foundry Services (IFS) business since announcing it in March 2021. After somewhat of a rough start, Intel’s foundry business had an outstanding second quarter this year, reporting a revenue of $232 million, a significant increase from the $57 million reported last year. According to Intel, the rise in sales are the result of “advanced packaging,” which allowed the company to combine pieces of chips made by another company to create a more powerful chip.
Intel CEO Pat Gelsinger didn’t linger on the disappoint of the deal falling through, but instead focused on the company’s efforts to continued “executing well on our roadmap to regain transistor performance and power performance leadership by 2025.”
