Intel expands in chipmaking biz with $5.4Bn deal for Israel’s Tower

Intel, a leading semiconductor firm, has announced purchasing Israel based chipmaker, Tower Semiconductor in a $5.4 billion deal, in order to get access to additional specialized manufacturing as it aims to make use of the rising semiconductor demand.

Reportedly, Intel is paying $53 per share for Tower, which specializes in analog chips used in scientific sensors, automobiles and gear control, above the closing price of $33.13 at the Nasdaq.

The acquisition intensifies Intel’s presence in the area dominated by Taiwan-centric TSMC which is the largest chipmaker in the world, during the period when the worldwide semiconductor shortage has hampered the manufacturing of almost everything ranging from cars to smartphones.

Gus Richard, Analyst at Northland Capital Markets, stated that Tower is a foundry for trailing edge process technology which will possibly be tight during the upcoming several years.

For the record, Intel declared entering the foundry business segment the previous year, on which, the analysts commented that it could possibly face the challenge of lack of deal targets.

Pat Gelsinger, Chief Executive at Intel, mentioned that technologies of Intel and Tower are complementary, with the foundry industry at $100 billion and anticipated to expand sharply in the coming decade.

Imperatively, Tower is said to be investing in Texas, Israel and Japan to drive the capacity for 200–300-millimeter chips. Tower also serves ‘fabless’ firms which design chips but outsource the production along with catering to integrated device manufacturers.

For the uninitiated, Tower, earlier known as TowerJazz, has the capacity for almost 2 million wafer starts per year.

Post the announcement of the acquisition, Tower’s shares rose by 42% in early trade in New York to $47.03 from $3.6 billion. Meanwhile, the shares of Intel rose by over 1%.

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