Intel suffered a setback for a key part of CEO Pat Gelsinger’s comeback plan on Wednesday when the semiconductor giant announced the termination of its $5.4 billion deal to acquire Israeli chipmaker Tower Semiconductor.
In an early Wednesday announcement, the Santa Clara, Calif.-based company said it was walking away from the deal because it was unable to receive the necessary regulatory approvals required by its merger agreement, which was announced more than a year ago on Feb. 15, 2022.
[Related: Intel Reorganizes Sales Team For AWS, Dell And Other Major Accounts After Exec Leaves]
The termination of the deal will serve as a blow to Intel Foundry Services, the company’s nascent but growing contract chip-making business, because the semiconductor giant had viewed the Tower acquisition as a way to “significantly” advance its plan to manufacture chips for other companies.
The move to build a contract manufacturing business that competes with Asian foundry giants TSMC and Samsung Electronics plus smaller companies is key to Pat Gelsinger’s plan to revitalize the American chipmaker as part of his IDM 2.0 strategy. The strategy is an evolution of the company’s integrated device manufacturing model where it fabricates the chips it designs.
Despite the deal falling through, Gelsinger reiterated in a Wednesday statement that Intel’s foundry efforts “are critical to unlocking the full potential of IDM 2.0” and added that the company continues “to drive forward on all facets of our strategy.”
“We are executing well on our road map to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs,” he said.
What follows are five important things to know about Intel’s terminated $5.4 billion Tower acquisition and how it will impact Intel Foundry Services as well as the company’s IDM 2.0 strategy.
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Dylan Martin is a senior editor at CRN covering the semiconductor, PC, mobile device, and IoT beats. He has distinguished his coverage of the semiconductor industry thanks to insightful interviews with CEOs and top executives; scoops and exclusives about product, strategy and personnel changes; and analyses that dig into the why behind the news. He can be reached at [email protected].
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