Intel buys Tower Semiconductor for $5.4 billion to diversify foundry business

Intel has agreed to pay $5.4 billion to buy Tower Semiconductor, an Israeli foundry that focuses on specialty processes to make chips for imaging, power management, and wireless communications.

 

The acquisition is Intel’s latest move to add capacity and customers to its new foundry division, which focuses on making chips for other companies. CEO Pat Gelsinger is betting that by expanding capacity and making more semiconductors—not just its own—his company can claw its way get back to the leading edge. Today, just two firms, TSMC and Samsung, make the world’s most advanced chips.

 

“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,” Gelsinger said in a statement.

Intel and Tower said they expect the transaction to be completed in about a year provided that it gets approved by regulators.

 

Tower runs five fabs itself—two in Israel, two in the US, and one in Italy—and another three in Japan with Nuvoton Technology Corporation Japan.

 

Intel has been aggressively pursuing its “IDM 2.0” strategy with a string of announcements and acquisitions. Last week it announced that it was investing in some key technologies, including RISC-V, in an attempt to gain market share in the low-power and embedded markets. Last month, it announced a $20 billion “megafab” in Ohio that will start making chips in 2025. And last fall, Intel announced another $20 billion investment in Arizona, where it’s adding two more fabs to its Ocotillo campus.