Intel: £4.2bn deal to buy Israeli chipmaker Tower Semiconductor lapses on China stall
Intel and Israeli chipmaker Tower Semiconductor have “mutually agreed” to call off their $5.4bn (£4.2bn) deal due to regulatory hurdles from China.
In a statement on Wednesday, leading semiconductor manufacturer Intel said it will pay a termination fee of $353m to Tower after the merger failed to get approval from regulators by its 15 August deadline.
Intel, which has held operations in China since the mid-1980s, successfully got its merger past US and European regulators but it ran into trouble in China, which failed to give a ruling on the deal in time.
“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,” Tower Semiconductor said in a statement.
The specifics of the regulatory issues were not disclosed by either company.
Shares in Tower plunged more than 10 per cent on Wednesday, while Intel fell over 2.5 per cent.
Pat Gelsinger, Intel chief executive, said the firm “will continue to look for opportunities to work together in the future”.
Despite the setback, Intel remains invested in its foundry business and is set to invest $25bn in a new factory in Israel – the country’s biggest ever international investment.
The termination follows a similar event last November, when DuPont De Nemours’ $5.2bn deal to buy Rogers Corp collapsed due to Chinese regulatory delays.
It highlights the growing influence of geopolitical tensions, particularly between the US and China, on corporate deals in the technology sector.