Persevering with their current spending spree in increasing their foundry capabilities, Intel this morning has introduced that it has struck a deal to amass specialty foundry Tower Semiconductor for $5.4 billion. If authorized by shareholders and regulatory authorities, the deal would end in Intel considerably increasing its personal contract foundry capabilities, buying not solely Tower’s varied fabs and specialty manufacturing traces, but additionally the corporate’s expertise in working contract foundries over the long term.
The proposed deal marks the most recent enterprise from Intel that’s designed to bolster Intel Foundry Companies’ (IFS) manufacturing capabilities. Within the final month and a half alone, Intel has introduced plans to construct a $20B fab advanced in Ohio that can, partially, be used to fab chips for IFS, in addition to a $1B fund to help firms constructing new and important applied sciences for the general foundry ecosystem. The Tower Semiconductor acquisition, in flip, is one more piece of the puzzle for IFS, fleshing out Intel’s foundry capabilities for extra unique merchandise.
As a specialty foundry, the Israel-based Tower Semiconductor is finest identified for its analog choices, in addition to its different specialised course of traces. Among the many chip sorts produced by Tower are MEMS, RF CMOS, BiCMOS, CMOS picture sensors, silicon–germanium transistors, and energy administration chips. Primarily, Tower makes many of the unique chip sorts that logic-focused Intel doesn’t – a lot in order that Intel has been a Tower buyer lengthy earlier than right this moment’s deal was introduced. All of which is why Intel desires the agency and its capabilities: to spice up IFS’s potential to make chips for patrons who aren’t after a straight ASIC processor.
The proposed acquisition would additionally see Intel decide up possession of/entry to the 8 foundry services that Tower makes use of. This consists of the Tower-owned 150mm and 200mm fabs in Israel and two 200mm fabs within the US. In the meantime Tower additionally has majority possession in two 200mm fabs and a 300mm fab in Japan, and a future 300mm facility in Italy that can be shared with ST Microelectronics. As is typical for analog and different specialty processes the place density isn’t a crucial issue (if not a detriment), all of those fabs are based mostly round mature course of nodes, starting from 1000nm right down to 65nm, which sits in stark distinction to Intel’s modern logic fabs.
Together with Tower’s manufacturing know-how, the proposed deal would additionally see Intel decide up Tower’s experience within the contract foundry enterprise, which is one thing the traditionally insular Intel lacks. On prime of their fab providers, Tower additionally affords its prospects digital design automation and design providers utilizing a spread of IP, all of which can be folded into IFS’s expanded choices as a part of the deal. Consequently, though the corporate has already introduced on executives and different personnel with contract fab expertise in previous hirings, this may be the only largest expertise transaction for IFS.
All advised, Intel at the moment expects the deal to take round 12 months to shut, with the corporate paying $5.4 billion in money from its steadiness sheet for Tower Semiconductor shares. Although authorized by each the Intel and Tower Semiconductor boards, Tower’s stockholders will nonetheless have to approve the deal. Intel may even want regulatory approval from a number of governments so as to shut the deal, to which the corporate isn’t anticipating a lot objection to given the complementary nature of the 2 firms’ foundry choices. Nonetheless, because the final week alone has confirmed, regulatory approval for multi-billion greenback acquisitions isn’t at all times assured.