Intel to drop $5.4 billion Tower deal after China review delay, sources say

Intel to drop $5.4 billion Tower deal after China review delay, sources say

Intel Corp (INTC.O) will not proceed with its $5.4 billion acquisition of Israeli contract chipmaker Tower Semiconductor Ltd (TSEM.TA) due to the lack of regulatory approval from China. The decision comes as tensions between the United States and China spill over into corporate dealmaking, particularly in the technology sector. Intel will pay Tower a $353 million break-up fee instead of negotiating an extension of the contract. It remains uncertain whether the deal would have been approved if the companies had waited for the review’s completion. Intel and Tower declined to comment, and representatives for China’s antitrust regulator could not be reached for comment.

This situation mirrors a similar case from last year when DuPont De Nemours Inc (DD.N) abandoned its $5.2 billion deal to acquire electronics materials maker Rogers Corp (ROG.N) due to delays in securing approval from Chinese regulators. Intel CEO Pat Gelsinger had made efforts to obtain approval for the Tower deal, including a recent visit to China to meet with government officials. However, Gelsinger emphasized that Intel’s investment in its foundry business, which manufactures chips for other companies, would continue regardless of the outcome of the Tower acquisition.

In June, Israeli Prime Minister Benjamin Netanyahu announced that Intel had committed to investing $25 billion in a new factory in Israel, marking the largest-ever international investment in the country. Investors had already lost hope in the Tower deal, as reflected in the significant discount of Tower’s Nasdaq-listed shares compared to the deal price. Meanwhile, Intel’s foundry business reported increased revenue in the second quarter, driven by advancements in “advanced packaging” technology.

The demand for Intel’s chips has cooled after a period of strong growth during the pandemic, leading the company to implement cost-cutting measures. Intel aims to reduce costs by $3 billion this year and achieve savings of $8 billion to $10 billion by the end of 2025.

About News Team

Hi, I'm Alex Perez, an experienced writer with a focus on lifestyle and culture news. From food and fashion to travel and entertainment, I love exploring the latest trends and sharing my insights with readers. I also have a strong interest in world news and business, and enjoy covering breaking stories and events.

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