According to those who know the matter, Intel Corp. will cancel its $5.4 billion acquisition agreement with Israeli contract chipmaker Tower Semiconductor Ltd. after the business contract expires on Tuesday.
Intel Cancels $5.4M Tower Semiconductor Deal
According to National Diplomat, Intel failed to secure Chinese regulator clearance for its purchase of Tower in February 2022 as stipulated in its agreement with the Israeli company. Rather than trying to negotiate an extension of its contract, the business intends to pay Tower a $353 million break-up fee.
The modification demonstrates how disputes between the US and China over issues like trade, intellectual property, and Taiwan’s future influence business discussions, particularly regarding technological companies, according to The Star.
DuPont De Nemours Inc. cancelled its $5.2 billion acquisition of electronics materials firm Rogers Corp. last year due to difficulties receiving approval from Chinese regulators.
Meanwhile, Intel CEO Pat Gelsinger stated that he has been to China to speak with officials to have the Tower deal approved by Chinese regulators. Regardless of the Tower agreement, Gelsinger nonetheless intends to invest in Intel’s foundry division, which makes processors for other businesses.
According to an announcement by Israeli Prime Minister Benjamin Netanyahu in June, the technology company decided to make the largest-ever foreign investment in Israel, a $25 billion investment in a new factory.
Investors had given up on the Tower deal as a result. Previously trading at $53 per share on the Nasdaq, Tower’s shares ended trading on Tuesday at $33.78.
In the second quarter, company’s foundry branch outperformed rivals like the industry leader Taiwan Semiconductor Manufacturing Co by increasing sales from $57 million to $232 million.