Why Did Intel's Tower Deal Collapse Amidst Chinese Roadblock?

The planned acquisition of Israeli chipmaker Tower Semiconductor by US tech giant Intel has been terminated. This mutual agreement comes as a result of ongoing trade disputes between China and the US, leading to a lack of approval from Chinese antitrust regulators.

Deal Cancelled

Intel has attributed the termination of the $5.4bn deal to the delay in obtaining the necessary regulatory approvals. However, it is widely reported that the main catalyst for the deal's cancellation was the lack of approval from China. According to Bloomberg, Chinese antitrust regulators failed to give their approval before the deal's midnight deadline on 15 August.

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The US-China trade war and the chip ban imposed by the US on China are believed to have significantly impacted the outcome of this deal.

Intel's IDM 2.0 Strategy

The scuppered acquisition was expected to advance Intel's strategy for integrated device manufacturing, known as 'IDM 2.0.' This strategy involves integrating Intel's existing internal factory network with third-party capacity and new Intel foundry services. The deal was seen as a way for Intel to scale its foundry services and expand its reach in high-growth markets such as mobile, automotive, and power.

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Continued Strategy

Despite the termination of the deal, Intel CEO Pat Gelsinger has expressed the company's commitment to driving forward with its IDM 2.0 strategy. In a press release, Gelsinger stated that Intel will continue to explore future opportunities to work with Tower Semiconductor.

Intel's Partnership Extension

Just a day prior to the termination of the Tower Semiconductor deal, Intel announced an extension of its partnership with chip designer Synopsys. This partnership aims to bring new intellectual property and automation services to Intel's Foundry Services.

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While the anticipated acquisition of Tower Semiconductor by Intel has fallen through due to the lack of Chinese approval, Intel remains committed to its IDM 2.0 strategy and exploring future collaborations. The termination of the deal will result in Intel paying a fee of $353m to Tower Semiconductor. For more information and updates on Intel's activities, visit their official website.

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