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The termination of the $5.4bn deal is thought to be a result of ongoing trade disputes between China and the US.
US tech giant Intel has announced today (16 August) that its planned acquisition of Israeli chipmaker Tower Semiconductor has been terminated in a mutual agreement between both parties.
While Intel has attributed the termination to “the inability to obtain in a timely manner the regulatory approvals required under the merger agreement”, reports have indicated that the lack of approval from China is the primary catalyst.
According to Bloomberg, the $5.4bn acquisition was cancelled due to a lack of approval from Chinese antitrust regulators by the deal’s deadline of midnight, 15 August.
It is believed that the outcome of this deal is a result of recent tension between the US and China, as a trade war between the two countries has been steadily escalating with the former imposing a chip ban on the latter.
The now scuppered acquisition was originally announced in February of last year, with Intel stating that the deal would “significantly” advance its strategy for integrated device manufacturing, dubbed ‘IDM 2.0’, which involves the combination of its existing internal factory network with third-party capacity and new Intel foundry services.
Intel CEO Pat Gelsinger said at the time that Tower’s portfolio and reach would “help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally”.
It was also thought at the time that the deal would give the tech giant an advantage in high-growth markets such as mobile, automotive and power – three areas Tower specialises and serves in – as well as expanding Intel’s reach in the US and Asia.
In a press release today, Gelsinger stated that the company will “continue to drive forward on all facets” of its IDM 2.0 strategy.
“Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.”
In accordance with the terms of the merger agreement, Intel will now have to pay a fee of $353m to Tower.
This announcement comes just a day after Intel announced an extension of its partnership with chip designer Synopsys to bring new intellectual property and automation services to Intel’s Foundry Services.
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