Intel Corp. announced Tuesday plans to acquire Israeli specialist chipmaker Tower Semiconductor. Intel plans to pay $53 per share for the company in an all-cash sale, or about $5.4 billion. Tower makes specialty analog circuits used in mobile, automotive and power applications.
“The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand,” Intel said.
“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’s CEO.
“Together with Intel, we will drive new and meaningful growth opportunities and offer even greater value to our customers through a full suite of technology solutions and nodes and a greatly expanded global manufacturing footprint,” said Russell Ellwanger, Tower CEO.
Intel has been racing to spin up its Intel Foundry Services (IFS) business since announcing it In March 2021. Semiconductors are used in everything, and they’ve been in short supply since the beginning of the pandemic. Legislators in the U.S. have reacted by trying to give home-grown semiconductor development and manufacturing a shot in the arm. Intel has wasted no time: It committed to investing $20 billion to build two new semiconductor fabrication facilities in Arizona, which it says will bring more than 15,000 long-term jobs to the Arizona economy. Intel landed Qualcomm and Amazon Web Services (AWS) as customers for new chips over the summer, as well.
The company’s data center and IoT growth was a centerpiece of its most recently reported quarterly earnings. The semiconductor maker crushed its own quarterly guidance by $1.3 billion, ending the quarter with $19.5 billion in non-GAAP revenue. Results were up 4% year-over-year. Intel’s Data Center Group (DCG) reported $7.3 billion in quarterly revenue, up 20% year over year. Intel noted that it was a record for the business unit. The company attributes DCG’s strong numbers to recovery in enterprise and government spending. The company’s Internet of Things Group (IoTG) reported $1.1 billion in sales, up 36% year over year.
Intel said that the deal with Tower should close within the next twelve months, subject to the typical regulatory requirements. The deal was unanimously approved by Intel and Tower’s boards of directors.