Intel is making another bid to expand its chip manufacturing operations.
Intel has confirmed its $5.4 billion USD plans to acquire Tower Semiconductor, just hours after the first unofficial information about the move broke.
The deal will boost Intel’s IDM 2.0 strategy that involves outsourcing some production to foundries while making chips for third parties at Intel’s fabs. The move will also bring in an additional capacity of 2 million wafer starts per year to the semiconductor giant’s Intel Foundry Services division.
Tower had a market value of about $3.6 billion USD, so Intel is paying a pretty steep premium to acquire the company at the reported price.
Intel has made no secret of its desire to expand its chip manufacturing capacity, not only to meet demand from its own customers amid a global shortage of silicon chips, but also to pursue its ambitions to become a chip contract manufacturer and make chips for other companies besides itself.
With Tower Semiconductor under its wing, Intel has given its burgeoning contract chipmaking aspirations a major boost, both in terms of manufacturing capacity, global reach, and IP / technology.
“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,” Intel Chief Executive Pat Gelsinger said in a statement.
“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.”
Should the transaction receive shareholder and regulatory approval, Intel said that it expects the deal to close within the next 12 months.