Intel announced the acquisition of Tower Semiconductor, an Israeli foundry, for $53 per share, or a total of about $5.4 billion. Though, not the biggest semiconductor manufacturer in the world, Intel acquires Tower Semiconductor for $5.4 billion. It has 7 fabs and its chips don’t have the best process in the world, but Intel can benefit from its capabilities.
CEO Pat Gelsinger said Tower’s technology base, market reach, and customer relationships will help expand Intel’s foundry services and make Intel a significant provider of global foundry services.
Tower Semiconductor has acquired Jazz Semiconductor in the U.S. in 2008, Micron’s fab in Japan in 2011, a wafer fabrication company with Panasonic in 2014, Maxim’s fab in Texas in 2016, and has fabs in Israel, California, Texas, and Japan. We have fabs in Israel, California, Texas, Japan, and other locations, building 6″, 8″, and 12″ wafers in various processes to supply many types of chips.
Intel announced last year that it would join the foundry bandwagon with a new division called Intel Foundry Services (IFS). This will combine Intel’s process and packaging technology with capacity availability in Europe and the US to provide customers with customized product production services.
It is obvious that there is a race of foundries and Intel does not want to be left behind. Intel Foundry is the brand’s foundry service, and it looks like they will be investing a lot of money in this business. TSMC and Samsung have shown how big the business potential is in this sector, and Intel now wants to take advantage of it.
Who is Tower? An Israeli semiconductor manufacturer with 7 manufacturing facilities producing wafers from 150 mm to 300 mm. They are proficient in lithography up to 65 nm, so they are not the first technology, but they have 300 companies as customers.
The chips they make include CMOS sensors, RF (radio frequency) analog, MEMS, CIS, power discrete, chips for smartphones, automobiles, power ICs, etc. They make everything, and their working solutions in silicon photonics (SiGe) or lasers seem interesting.
The company has experience in the mobile, automotive, and energy industries, and its facilities are located in the US and Asia. They operate with a production capacity of more than 2 million wafers per year, which Intel would welcome.
Intel has a lot of experience in the chip and high-tech industry, so it can take advantage of this Israeli enclave to make more chips and meet greater demand. We don’t know what Intel’s plans are for the 7 Israeli fabs after this new acquisition, but it’s safe to say that the shares went up 53% after the deal closed.
And we are not talking about a poor company here: Intel is buying Tower Semiconductor at a time when the company is making profits and is financially healthy. The actual numbers will be presented on February 17, but the fact is that Intel closed the deal earlier than expected: Both companies received a unanimous green light from their boards of directors.
Intel’s press release talks about “capacity”; so one of the goals of the Santa Clara-based company is to increase capacity.
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