Intel Cancels a $ 5.4 Billion Tower Agreement
After the merger agreement between Intel Corp and Tower Semiconductor Ltd expired without receiving regulatory approval from China, Intel Corp cancelled its $5.4 billion acquisition of the Israeli contract chipmaker.
The Israeli company's US-listed shares plummeted roughly 11 percent in premarket trade.
Intel, which had decided to buy Tower last year, will pay a termination fee of $353 million to the latter, according to reports.
After careful consideration and thorough discussions and having received no indications regarding certain required regulatory approval, both parties have agreed to terminate their merger agreement having passed the August 15, 2023 outside date, according to reports.
The change highlights how tensions between the United States and China over topics like trade, intellectual property, and the future of Taiwan are affecting business negotiations, particularly when it comes to technology businesses.
Last year, due to delays in receiving approval from Chinese regulators, DuPont De Nemours Inc. cancelled its $5.2 billion acquisition of electronics materials manufacturer Rogers Corp.
Pat Gelsinger, the chief executive of Intel, had previously stated that he was working to get the Tower acquisition approved by Chinese regulators and had just recently travelled there to speak with government representatives.
Intel had agreed to spend $25 billion on a new factory in Israel, the largest-ever international investment in the country
Israeli Prime Minister Benjamin Netanyahu says,"Intel had agreed to spend $25 billion on a new factory in Israel, the largest-ever international investment in the country."
Intel's foundry division increased its sales in the second quarter from $57 million to $232 million, outpacing competitors like Taiwan Semiconductor Manufacturing Co., the market leader.