When Intel announced its proposal to acquire Tower Semiconductor for $5.4 billion in February 2022, it said it expected to close the transaction in 12 months. But the transaction is still not closed more than 13 months after the announcement since China's State Administration for Market Regulation still has not cleared it. But Intel remains optimistic that it will take over Tower by end of June.
The first quarter is about to end and so Intel Israel this week issued a statement saying that the company will continue to work toward closing the deal by the end of next week, but the transaction may not be cleared until later — sometime in the first half of this year (by the end of June 2023).
Israeli BizPortal cited the full statement, which was issued to Bloomberg:
"While we continue to work to close the Tower transaction within the first quarter of 2023, the transaction may close in the first half of 2023, subject to certain regulatory approvals and customary closing conditions," the statement reads.
By acquiring Tower Semiconductor, Intel can achieve multiple goals. First, it will get a contract maker of semiconductors with dozens of loyal customers and a stable revenue stream, which will be a good addition to the company's existing IFS clients. Second, it will get fabs with a host of mature process technologies that are widely adopted — importance of mature nodes should not be underestimated. Third, it will gain a team of seasoned executives with vast experience in contract chipmaking — something that the company currently lacks.
Intel's main problem with the acquisition of Tower Semiconductor is the stance of China's State Administration for Market Regulation (SAMR), which suspended the clock in its review of the transaction in January. Intel is about to get grants from the U.S. government's CHIPS and Science fund on the condition that it will not invest in China for the next 10 years after the receival. Meanwhile China wants Intel to keep investing in Chinese assets and is trying to leverage this by potentially blocking the transaction.
Earlier this week Intel appointed its own veteran to lead its Intel Foundry Service unit. It was widely believed that Intel planned to assign a Tower executive to that role after Randhir Thakur stepped down in November, so the recent appointment seemed to signal that Intel was not very confident in the outcome of the transaction.
