Intel (INTC) is buying Israeli chipmaker Tower Semiconductor (TSEM) for $5.4 billion U.S., the companies announced in a joint statement.
Intel is paying $53 U.S. per share for Tower Semiconductor, which specializes in analog chips used in cars, medical sensors and power management. That purchase price is well above a closing price of $33.13 U.S. on the Nasdaq stock exchange yesterday (February 14).
The deal will give Intel access to more specialized semiconductor production and better position it to take advantage of soaring demand for microchips.
Tower’s Tel Aviv-listed shares rose 40% on news of Intel’s purchase. Prior to the Intel deal being announced, Tower Semiconductor had a market value of $3.6 billion U.S.
The acquisition will deepen Intel’s presence at a time when the global semiconductor shortage has hampered the production of everything from smartphones to automobiles.
Tower has been investing in equipment at its manufacturing sites in Israel, Texas, and Japan to boost capacity for 200 and 300-millimeter chips. The company serves “fabless” companies that design chips but outsource manufacturing, as well as integrated device manufacturers and offers more than two million wafer starts per year of capacity, the companies said in a news release.
Intel has had a large presence in Israel for nearly 50 years and is one of Israel’s largest exporters. In 2017, the company bought Israeli autonomous vehicle technology firm Mobileye for $15.3 billion U.S. Intel has five sites in Israel and about 14,000 employees.
The transaction is expected to close in early 2023 and has already been unanimously approved by both boards. The deal is still subject to regulatory approvals, as well as the approval of Tower Semiconductor’s shareholders.
Tower will be integrated into Intel Foundry Services (IFS), which Intel established a year ago to help meet growing demand for semiconductor manufacturing capacity.
