Intel Corporation has officially terminated its plan to acquire Israel’s Tower Semiconductor, a deal worth $5.4 billion, after failing to secure the necessary regulatory approval. The obstacle to approval reportedly came from Chinese regulators, who did not show any indications of giving their consent to the merger. The deal had been agreed upon in early 2022.
As per the terms of the agreement, Intel will be required to pay Tower Semiconductor a termination fee amounting to $353 million. Tower Semiconductor’s CEO, Russell Ellwanger, expressed disappointment but appreciated the collaborative efforts between the two companies. The deal was abandoned when it became evident that certain regulatory approvals would not be granted within the contract’s stipulated timeframe.
Intel’s CEO, Pat Gelsinger, conveyed his respect for Tower Semiconductor and expressed a desire to explore future collaboration opportunities. The merger with Tower Semiconductor aimed to bolster Intel’s chip manufacturing services, particularly in the domain of analog semiconductors used in various applications, such as cars, medical devices, and security cameras.
This development is occurring in the context of growing tensions in the US-China relationship, particularly concerning the semiconductor industry. Intel’s significance as a tool to reduce the US’s dependency on major global chip producers, such as Taiwan’s TSMC, has made it a key element in these tensions. This comes as the US President, Joe Biden, recently issued an executive order to restrict specific American investments in sensitive high-tech sectors in China.
The new rules, expected to take effect in the coming year, focus on sectors like semiconductors and artificial intelligence. The initiative aims to prohibit new investments in advanced semiconductors and certain quantum information technologies in China, emphasizing the growing concerns around technological competition between the two nations.
China has strongly criticized this move, perceiving it as an attempt to undermine globalization and challenge China’s technological progress. The situation underscores the intricate dynamics between tech industries, geopolitics, and regulatory considerations on a global scale.
SOURCE: Ref Image from Barrons
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