Intel Accelerates business expansion by acquiring Tower Semiconductor for $5.4 billion
Intel (INTC) shares rose on the news of the chip manufacturer Tower Semiconductor’s acquisition of $5.4 billion, which will significantly expand Intel’s addressable market, contributing to the goal of becoming a contract manufacturer of chips for other companies. Tower (TSEM) shares jumped 42%.
Intel, the only major chip manufacturer in the United States with its factories, announced the acquisition of Israeli chip manufacturer Tower Semiconductor for $ 5.4 billion on Tuesday.
The deal represents Intel’s ongoing efforts to expand its manufacturing capacity to regain lost chip market share and take global leadership in semiconductor manufacturing.
Intel has set itself the goal of becoming a contract manufacturer of chips and competing with the Taiwanese giant Taiwan Semiconductor Manufacturing (TSM), producing semiconductors for third-party companies.
Intel CEO Pat Gelsinger said that Intel and Tower technologies complement each other, and the contract chip manufacturing market is at $100 billion. And it is expected to grow sharply over the rest of the decade.
Chips manufactured by Intel account for about 70% of this market, including the demand for chips for mobile phones and cars, he said, adding that the remaining 30% (such as power management chips) are by companies such as Tower.
Tower has seven contract chip manufacturing plants in Israel, Italy, and the USA and a 51% share of three TPSCo chip manufacturing factories in Japan. The deal between Intel and Tower is to close in about 12 months. Subject to the approval of Tower shareholders and regulatory approval, which, according to Gelsinger, will go smoothly.
Intel has stated that it intends to finance the takeover of Tower with cash from its balance sheet. In addition, the Tower will be integrated into the Intel Foundry Services (IFS) division, created a year ago upon completing the transaction. Quarterly revenue and profit statistics on the Intel Reports page.
In 2021, Intel spent $20.9 billion. For acquisitions, expansion of production, and development (R&D and MG&A). At the same time, Intel earned $22.4 billion in profit (net income) at the end of the year and had $11.3 billion. Free Cash Flow (FCF).
Intel (INTC) shares, down 21.7% over the past 12 months and almost 6% since the beginning of 2022, closed up 1.8% on Tuesday. Trading signals and forecasts for Intel shares. Tower Semiconductor (TSEM) shares jumped 42% in one trading day, offsetting more than twice the drop since the beginning of 2022.
