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Intel nears US$5 billion deal to buy Tower Semiconductor as it moves towards chip-foundry business to compete with TSMC

  • The US chip maker plans to buy the Israeli company in a deal that could help it push into outsourced chip-manufacturing business
  • Intel CEO Pat Gelsinger previously said the company found little success in this area because it lacked commitment to the foundry business

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US chipmaker Intel Corp’s logo seen on their “smart building” in Petah Tikva, near Tel Aviv, Israel, on December 15, 2019. Photo: Reuters
Bloomberg
Intel Corp is close to a deal to acquire Tower Semiconductor Ltd for about US$5 billion as part of its push into the outsourced chip-manufacturing business, according to a person familiar with negotiations.

The US chip maker plans to announce the purchase of the Israeli company as early as Tuesday morning, according to the person, who asked not to be identified because the matter is private. The Wall Street Journal previously reported on the deal.

Intel declined to comment on the transaction, while Tower didn’t immediately respond to requests for comment.

The move furthers chief executive officer Pat Gelsinger’s goal of getting into the chip-foundry business – contract manufacturing of semiconductors for other companies. Tower competes in a market dominated by Taiwan Semiconductor Manufacturing Co, but is much smaller. Its sales are about US$1.3 billion annually.

Tower’s shares jumped as much as 58 per cent to US$52.20 in late trading on the news Monday. Intel fell less than 1 per cent.

The business of providing manufacturing for other companies requires experience in handling different types of chips and designs. Intel has previously had little success in that area because of a lack of commitment to it, Gelsinger has said. Tower makes power management chips, image sensors and a variety of other semiconductors. Its customers include Analog Devices Inc and Broadcom Inc, according to data compiled by Bloomberg.

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