Intel Buys Israel's Specialty Chipmaker Tower For $5.4B

Intel Corp. is buying Israeli chipmaker Tower Semiconductor for $5.4 billion, the companies said on Tuesday, giving it access to more specialized production and making it better positioned to take advantage of soaring demand for semiconductors, Steven Scheer reported for Reuters.

Photo Insert: The acquisition will deepen Intel's presence in a sector dominated by Taiwan-based TSMC

Intel is paying $53 per share for Tower - which specializes in analog chips used in cars, medical sensors, and power management - well above a closing price of $33.13 on the Nasdaq on Monday. After a delayed opening, Tower's Tel Aviv-listed shares were 40% higher on Tuesday.

They had surged 48% in after-hours trading on Nasdaq on Monday after news of a possible takeover was reported. Prior to the announcement, Tower had a market value of $3.6 billion.

The acquisition will deepen Intel's presence in a sector dominated by Taiwan-based TSMC, the world's largest chipmaker, at a time when the global semiconductor shortage has hampered the production of everything from smartphones to cars.

Tower has been investing in equipment at its manufacturing sites in Israel, Texas, and Japan to boost capacity for 200- and 300-millimeter chips.

The company serves "fabless" companies - which design chips but outsource manufacturing - as well as integrated device manufacturers and offers more than 2 million wafer starts per year of capacity, the companies said. Tower Semiconductor changed its name from TowerJazz in 2020.

"Tower’s specialty technology portfolio (and) geographic reach ... will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally," said Intel Chief Executive Pat Gelsinger.

"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," he said in a statement.

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