Update: The Intel acquisition of Tower Semiconductor has gone through for a value of $5.4 billion, at a price of $53 per share. Through the deal, Intel adds Tower Semiconductor's infrastructure, IP, technicians, logistics and clients to its portfolio. Intel CEO Pat Gelsinger said that "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." He then added that "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." The original story follows.

Intel is reportedly looking to increase its manufacturing capability - and its cadre of wafer-purchasing clients - by acquiring Israeli semiconductor manufacturer Tower Semiconductor. If true, the deal will bring seven additional foundries to Intel's existing infrastructure, capable of 2 million wafer starts per year. The foundries are located across three continents: Tower Semiconductor owns and operates a 150 mm and a 200 mm fab in Migdal Haemek, Israel; two 200 mm fabs in the United States (Newport Beach, California and San Antonio, Texas); two 200 mm fabs in Japan; and one additional 300 mm fab in Japan. The deal could be finalized as soon as this week.Tower Semiconductor isn't a cutting edge manufacturer; it's competition lies more with Globalfoundries and China's SMIC than with TSMC or Intel itself. The company specializes in the manufacturing of analog circuitry, sensors, MEMS, mixed-signal, RFCMOS, silicon photonics and PMICs, among others) using specialty process technologies like BiCMOS, SiGe, and SOI. Tower Semiconductor stands as the world's sixth largest semiconductor manufacturer, with revenues in 2021 totalling 1.3 billion.

Should the acquisition proceed, this looks like the fastest way for Intel to grow its IDM 2.0 strategy quickly and without the time investment of building new capacity and logistics solutions. Six total semiconductor factories in three continents serving contracted clients is nothing to scoff at, and will instantly boost Intel's revenues for its client manufacturing chip business. At the same time, it increases Intel's foothold in the analog and specialty semiconductor business, which requires less significant investments in R&D than cutting edge processes.

Update 14:50 UTC: The press-release from Intel announcing the acquisition follows:

Intel Corporation (Nasdaq: INTC) and Tower Semiconductor (Nasdaq: TSEM), a leading foundry for analog semiconductor solutions, today announced a definitive agreement under which Intel will acquire Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. 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.

"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."

As a key part of its IDM 2.0 strategy, Intel established Intel Foundry Services (IFS) in March 2021 to help meet the growing global demand for semiconductor manufacturing capacity and to become a major provider of U.S.- and Europe-based foundry capacity to serve customers globally. IFS currently offers leading-edge process and packaging technology, committed capacity in the U.S. and Europe and other geographies in the future, and a broad intellectual property (IP) portfolio.

Tower's expertise in specialty technologies, such as radio frequency (RF), power, silicon-germanium (SiGe) and industrial sensors, extensive IP and electronic design automation (EDA) partnerships, and established foundry footprint will provide broad coverage to both Intel and Tower's customers globally. Tower serves high-growth markets such as mobile, automotive and power. Tower operates a geographically complementary foundry presence with facilities in the U.S. and Asia serving fabless companies as well as IDMs and offers more than 2 million wafer starts per year of capacity - including growth opportunities in Texas, Israel, Italy and Japan. Tower also brings a foundry-first customer approach with an industry-leading customer support portal and IP storefront, as well as design services and capabilities.

"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 global scale to enable our customers' ambitions."

Intel is the only leading-edge player with both research and development and manufacturing in the U.S., including recently announced capacity expansions in Arizona and New Mexico, as well as plans to build a new mega-site in Ohio. Tower's technology and manufacturing footprint is highly complementary to Intel's IFS capabilities in leading-edge processes, allowing the combined company to provide broader offerings to customers at scale. With the addition of Tower, Intel is strongly positioned to bring more value to customers across the nearly $100 billion addressable foundry market.

Transaction Details and Timing
The transaction is expected to be immediately accretive to Intel's non-GAAP EPS. Intel intends to fund the acquisition with cash from the balance sheet.
The transaction is expected to close in approximately 12 months. It has been unanimously approved by Intel's and Tower's boards of directors and is subject to certain regulatory approvals and customary closing conditions, including the approval of Tower's stockholders.
IFS and Tower Semiconductor will run independently until deal closure; IFS will continue to be led by Thakur, and Tower will continue to be led by Ellwanger during this time. Upon the close of the transaction, Intel's intent is for the two organizations to become a fully integrated foundry business. The company will share more details on integration plans at that time.

Goldman Sachs & Co. LLC served as financial advisor to Intel; and Skadden, Arps, Slate, Meagher & Flom LLP and Yigal Arnon & Co. served as legal advisors. J.P. Morgan Securities LLC served as financial advisor to Tower; and Latham & Watkins, LLP and FISCHER (FBC & Co.) served as legal advisors.

Transaction Discussion Audiocast
Intel and Tower management will host a conference call for investors, media and industry analysts at 5:30 a.m. PST (3:30 p.m. IST) today to discuss the transaction and Intel's foundry strategy. Please visit http://www.directeventreg.com/registration/event/4070988 to register for the conference call. The conference call can also be accessed in the United States at 1-888-869-1189 and outside the United States at 1-706-643-5902. A replay will be available on Intel's Investor Relations website, INTC.com.

Tower Semiconductor Fourth Quarter and Fiscal Year 2021 Earnings Release Update
Tower will issue its fourth-quarter and fiscal year 2021 financials on Feb. 17, 2022. In light of the announced transaction, Tower will not provide guidance for the first-quarter 2022 and will not host an earnings conference call.