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Intel to buy Israeli chipmaker Tower Semiconductor in $5.4 billion deal amid global chip shortage

The acquisition is part of Intel’s strategy as it seeks to restore dominance in chip-making and reduce America’s reliance on Asian manufacturing hubs

An Intel building in Jerusalem, May 18, 2016. (Photo: Yonatan Sindel/Flash90)

The American computing giant, Intel, agreed to buy the Israeli chipmaker, Tower Semiconductor, in a $5.4 billion deal that the companies announced on Tuesday.

According to a statement, Intel will pay Tower $53 per share in cash. The deal, which has been approved by the companies’ boards, is expected to close in about 12 months.

Tower, based in northern Israel, specializes in analogue chips used in cars, medical sensors, and power management. The company employs some 6,000 workers and operates manufacturing facilities in Israel, California, Texas and Japan. The deal with Intel is set to provide the Israeli company with access to more specialized production.

“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.”

Tower is expected to broaden Intel’s production capacity and strengthen its position in certain markets where the company is less active today, as Intel is looking to expand its operations amid a global chip shortage.

“The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand,” Intel said.

The U.S. chipmaker said last month it would invest up to $100 billion to build the world's largest chip-making complex in Ohio. The move is part of Intel’s strategy to restore its dominance in chip-making and reduce America's reliance on Asian manufacturing hubs.

Israel has been a huge development center for Intel for decades. Intel’s purchase of Tower Semiconductor will be its sixth acquisition of an Israeli company over the past five years. In 2017, Intel acquired Jerusalem-based Mobileye, which offers autonomous driving solutions, for $15 billion, in the biggest acquisition of an Israeli company to date.

Read more: BUSINESS

Tal Heinrich is a senior correspondent for both ALL ISRAEL NEWS and ALL ARAB NEWS. She is currently based in New York City. Tal also provides reports and analysis for Israeli Hebrew media Channel 14 News.

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