Intel calls off US$5.4b Tower deal after failing to obtain regulatory approvals

HONG KONG –

Intel will terminate a US$5.4 billion deal to amass Israeli chip producer Tower Semiconductor after China did not log out on the deal amid rising tensions with the United States.

It was a mutual choice between Intel and Tower, the businesses mentioned Wednesday. Intel mentioned that the deal was terminated “due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement.”

Intel Corp. pays Tower a termination payment of US$353 million, the U.S. semiconductor large mentioned.

The deal required regulatory approval from a number of regulators worldwide together with China, however Chinese regulators didn’t greenlight the deal by the Aug. 15 transaction deadline, even after Intel CEO Patrick Gelsinger travelled to China final month in a bid to win them over.

The scuttled deal between the 2 firms comes amid growing U.S.-China tensions, significantly because the U.S. has tightened export controls and imposed restrictions aimed toward crippling China’s skill to buy and manufacture superior chips.

In response, China’s antitrust regulator, the State Administration for Market Regulation, seems to have dragged its toes on approving mergers involving American firms, such because the Intel-Tower deal.

Intel initially aimed to shut the deal by the primary quarter of the yr, however later prolonged the deadline after it did not obtain approval from China. Intel hoped that its acquisition of Tower would broaden its manufacturing capability and open up progress alternatives for the agency in U.S., Israel, Italy and Japan.

Tower’s inventory value fell greater than 11 per cent in pre-market buying and selling within the U.S. The firm’s inventory value in Tel Aviv additionally plunged over 10 per cent.

“Tower was very excited to join Intel to enable Pat Gelsinger’s vision for Intel’s foundry business,” mentioned Russell Ellwanger, Tower Semiconductor’s CEO in a press release. “We appreciate the efforts by all parties.”