The acquisition of Tower Semiconductor increases the speed of Intel’s multinational, end-to-end foundry enterprise.
Intel launched the Intel Foundry Services (IFS) in March 2021. The purpose of the IFS is to assist the growing global demand for semiconductor manufacturing capacity and evolve into an influential provider of U.S.- and Europe-based foundry capacity to aid customers worldwide. The IFS currently delivers a leading-edge process and packaging technology, dedicated ability in the U.S. and Europe and other geographies in the future, and a broad intellectual property (IP) portfolio. Tower serves high-growth markets such as mobile, automotive, and power. 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 supply expansive coverage to both Intel and Tower’s customers globally. Tower serves a geographically complementary foundry presence with facilities in the U.S. and Asia serving fabless companies and 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. — Pat Gelsinger, Intel CEO Dr. Randhir Thakur, president of Intel Foundry Services, states: — Russell Ellwanger, Tower CEO Intel is the foremost leading-edge player with both research and development and manufacturing in the U.S., including newly publicized capacity additions in Arizona and New Mexico, and plans to construct a new mega-site in Ohio. Tower’s technology and manufacturing footprint complement Intel’s IFS capabilities in leading-edge processes, permitting the combined company to provide more expansive offerings to customers at scale. With the obtainment of Tower, Intel is strongly positioned to bring more significance to customers spanning the nearly $100 billion addressable foundry market. The transaction foresees being directly accretive to Intel’s non-GAAP EPS. Intel intends to fund the acquisition with cash from the balance sheet. The transaction is set to close in roughly 12 months. The acquisition is unanimously under approval 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. Tower will issue its fourth-quarter and fiscal year 2021 financials on Feb. 17, 2022. Tower will not guide for the first quarter of 2022 and will not host an earnings conference call in light of the announced transaction.
