Intel is seeking to expand its specialty chipmaking with the acquisition of Israeli-based Tower Semiconductor.
United States-based chip manufacturer Intel announced earlier today that it has agreed to acquire Israeli-based Tower Semiconductor. The deal is reportedly worth $5.4 billion.
According to the Reuters report, Intel is paying $53 per share for Tower, which is above the company's closing price of $33.13 on the NASDAQ stock exchange yesterday. The deal is set to increase Intel's specialty in chip making.
Tower Semiconductor is known for manufacturing analogue chips used in cars, medical sensors and power management. The acquisition will see Intel compete even more with Taiwan-based TSMC, which is currently the world's leading chip manufacturer.
The deal also comes at a time when there is a global shortage in chips, which has affected the manufacturing of numerous devices, from smartphones to cars.
Tower Semiconductor has been expanding its operations in Israel, Texas and Japan in a bid to manufacture 200 and 300 millimetre chips. The company has spent heavily on equipment over the past few months.
Intel Chief Executive Pat Gelsinger stated that the acquisition of Tower Semiconductor would be a huge boost for the company. He stated that;
"Tower's specialty technology portfolio (and) geographic reach … will help scale Intel's foundry services and advance our goal of becoming a major provider of foundry capacity globally. This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes – unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors."
The acquisition is expected to close in 12 months, and the boards of both companies have approved the deal. However, the deal is still subject to regulatory approvals from antitrust agencies in the United States and Israel.
In addition to that, Tower Semiconductor's shareholders will also need to approve the deal before the transaction is concluded.
