Intel's Acquisition of Israel's Tower Semiconductor Falls Through: "Contract Terminated Due to Lack of Chinese Approval"

Completed After 1 Year and 6 Months Since Announcement in February Last Year
Gelsinger CEO Fails to Persuade During Visit to China Last Month

Intel announced on the 15th (local time) that it is abandoning its acquisition of Israeli foundry (semiconductor contract manufacturing) company Tower Semiconductor. The acquisition was announced last February to expand its foundry business, but since it failed to obtain approval from Chinese authorities, it was ultimately decided to terminate the contract by mutual agreement.

Intel's announcement came past the acquisition deadline at midnight California time on the 15th. This decision came one and a half years after Intel announced in February last year that it would acquire Tower Semiconductor for $5.4 billion (approximately 7.2 trillion KRW).

[Image source=Reuters Yonhap News]

According to Bloomberg and other sources, Intel initially expected the approval process from relevant authorities to take 12 months at the time of the acquisition announcement. However, it failed to complete the approval process within the target deadline, and Intel set the first quarter of this year as the new target deadline again in October last year.

When a semiconductor company acquires another semiconductor company, approval from the relevant countries must be obtained considering antitrust issues. Given the escalating US-China tensions and the fact that Intel, a leading US semiconductor company, was pursuing the acquisition of Tower Semiconductor to expand its foundry business, it was widely expected that China would be unlikely to approve the deal.

Intel and Tower Semiconductor could have extended the contract period to wait for regulatory approval, but foreign media reported that since it was unclear whether China would approve even if they did so, this decision was made. Intel agreed to pay Tower Semiconductor a termination fee of $335 million due to the breakdown of negotiations.

Intel expressed significant regret over the failed merger. Pat Gelsinger, Intel's CEO, personally visited China last month to seek approval for the Tower Semiconductor acquisition and met with government officials to persuade them, but ultimately was unsuccessful.

In the statement on the termination of the acquisition agreement, CEO Gelsinger said, "Our foundry efforts are critical to fully realizing the potential of IDM 2.0, and we continue to pursue all aspects of the strategy," adding that they will explore ways to collaborate with Tower Semiconductor going forward.

This content was produced with the assistance of AI translation services.