- Transaction creates a globally diverse end-to-end foundry to help meet growing semiconductor demand and brings more value to customers across the nearly $100 billion addressable foundry market.
- Acquisition accelerates Intel’s path to becoming a major provider of foundry services and capacity globally, now offering one of the industry’s broadest portfolios of differentiated technology.
- Highly complementary transaction brings together Intel’s leading-edge nodes and scale manufacturing with Tower Semiconductor’s specialty technologies and customer-first approach to deliver leading technology and manufacturing capabilities and enhanced value to customers globally.
- Transaction is expected to be immediately accretive to Intel’s non-GAAP EPS.
SANTA CLARA, Calif., and MIGDAL HAEMEK, Israel, Feb. 15, 2022 – Tower Semiconductor (Nasdaq: TSEM), a leading foundry for analog semiconductor solutions, and Intel Corporation (Nasdaq: INTC) today announced a formal agreement under which Intel would acquire Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. Intel’s IDM 2.0 plan will be greatly advanced as the business develops its production capacity, global location, and technology portfolio to meet unprecedented industry demand.
“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,” said Pat Gelsinger, Intel CEO. “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.”
Intel founded Intel Foundry Services (IFS) in March 2021 as part of its IDM 2.0 plan to help satisfy the rising global demand for semiconductor manufacturing capacity and to become a leading provider of U.S. and European-based foundry capacity to serve customers worldwide. IFS presently offers a cutting-edge process and packaging technologies, as well as committed capacity in the United States and Europe, as well as a large intellectual property (IP) portfolio in the future.
Tower’s expertise in specialty technologies like radio frequency (RF), power, silicon germanium (SiGe), and industrial sensors, as well as its extensive IP and electronic design automation (EDA) partnerships and established foundry footprint, will provide broad coverage to both Intel and Tower’s customers around the world. Tower focuses on high-growth industries like mobile, automotive, and energy. Tower has a geographically complementary foundry footprint in the United States and Asia, supporting fabless firms as well as IDMs, and has a capacity of more than 2 million wafer starts per year, with expansion potential in Texas, Israel, Italy, and Japan. Tower also offers design services and capabilities, as well as a foundry-first customer strategy with an industry-leading customer support web and IP storefront.
“With a rich history, Tower has built an incredible range of specialty analog foundry solutions based upon deep customer partnerships, with worldwide manufacturing capabilities. I could not be prouder of the company and of our talented and dedicated employees,” said Russell Ellwanger, Tower CEO. “Together with Intel, we will drive new and meaningful growth opportunities and offer even greater value to our customers through a full suite of technology solutions and nodes and a greatly expanded global manufacturing footprint. We look forward to being an integral part of Intel’s foundry offering.”
Dr. Randhir Thakur, president of Intel Foundry Services, said: “We are thrilled to welcome the Tower team to Intel. Their decades of foundry experience, deep customer relationships, and technology offerings will accelerate the growth of Intel Foundry Services. We are building Intel Foundry Services to be a customer-first technology innovator with the broadest range of IP, services, and capacity. Tower and IFS together will provide a broad portfolio of foundry solutions at a global scale to enable our customers’ ambitions.”
Intel is the only leading-edge company having both R&D and production facilities in the United States, with capacity increases in Arizona and New Mexico recently announced, as well as plans to create a new mega-site in Ohio. Tower’s technology and production footprint complement Intel’s IFS capabilities in cutting-edge processes, allowing the combined firm to offer clients a greater range of products at scale. Intel is well-positioned to provide more value to clients in the approximately $100 billion addressable foundry industry with the integration of Tower.
Tower Semiconductor Ltd. (Nasdaq: TSEM, TASE: TSEM), the leading foundry of high-value analog semiconductor solutions, provides technology and manufacturing platforms for integrated circuits (ICs) in growing markets such as consumer, industrial, automotive, mobile, infrastructure, medical, and aerospace and defense. Tower Semiconductor focuses on creating a positive and sustainable impact on the world through long-term partnerships and its advanced and innovative analog technology offering, comprised of a broad range of customizable process platforms such as SiGe, BiCMOS, mixed-signal/CMOS, RF CMOS, CMOS image sensor, non-imaging sensors, integrated power management (BCD and 700V), and MEMS. Tower Semiconductor also provides world-class design enablement for a quick and accurate design cycle as well as process transfer services including development, transfer, and optimization, to IDMs and fabless companies. To provide multi-fab sourcing and extended capacity for its customers, Tower Semiconductor owns two manufacturing facilities in Israel (150mm and 200mm), two in the U.S. (200mm), three facilities in Japan (two 200mm and one 300mm) which it owns through its 51% holdings in TPSCo and is sharing a 300mm manufacturing facility being established in Italy with ST Microelectronics. For information, please visit www.towersemi.com.
Transaction Details and Timing
Intel’s non-GAAP EPS is expected to increase immediately as a result of the purchase. Intel wants to pay for the purchase with cash on its balance sheet.
The acquisition is likely to be completed in about a year. It has been unanimously authorized by the boards of directors of Intel and Tower and is subject to regulatory clearances and standard closing conditions, including Tower stockholder approval.
IFS and Tower Semiconductor will operate separately until the purchase is completed; Thakur will continue to lead IFS, and Ellwanger will continue to lead Tower. Intel intends for the two companies to become a fully integrated foundry operation after the purchase is completed. At that point, the corporation will provide more information about its integration plans.