Intel reaches $5.4 billion deal to buy Tower Semiconductor
Intel Corp. on Tuesday struck a $5.4 billion deal to buy Tower Semiconductor, as it seeks to bolster its manufacturing capabilities.
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Read: Semiconductor sales top half a trillion dollars for the first time, and are expected to keep growing
Tower, which makes a wide variety of chips ranging from those catering to the consumer, industrial, automotive and mobile markets, has manufacturing facilities —- called “fabs” in industry parlance — in Migdal Haemek, Israel; Agrate, Italy, Newport Beach, Calif.; and San Antonio, Texas, according to Tower’s website.
Tower also owns a 51% stake in TPSCo. with Nuvoton Technology Corp. 4919,
“Tower’s specialty technology portfolio, geographic reach, deep customer relationships and services-first operations will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally,” said Pat Gelsinger, Intel CEO, in a statement.
Intel has pledged to build out its manufacturing capacity, earmarking up to $28 billion for 2022 back in October, and recently said it will spend more than $20 billion to build a “mega-site” fab in Ohio, as well as $20 billion for sites in Arizona. The move to build capacity has met with concern from analysts because Intel’s spending is punishing the company’s gross margins.
In July, Intel was reportedly seeking to acquire a then-privately owned GlobalFoundries GFS,
Intel said the acquisition will immediately lift its adjusted earnings per share upon closing and be funded with cash from the balance sheet.
Goldman Sachs advised Intel, while JPMorgan advised Tower.