Intel Corp (INTC.O) has withdrawn its $5.4 billion acquisition bid for Israeli contract chipmaker Tower Semiconductor Ltd (TSEM.TA) as the merger agreement lapsed without Chinese regulatory approval. This move caused a significant drop of around 11% in Tower’s U.S.-listed shares during premarket trading.
Intel will pay a termination fee of $353 million to Tower Semiconductor. The decision reflects growing tensions between the U.S. and China, impacting corporate deals, especially in the tech sector.
Intel CEO Pat Gelsinger had made efforts to secure Chinese regulatory approval for the Tower deal and even recently visited China for discussions.
Regardless of the Tower acquisition, the company is still dedicated to its foundry business, which makes chips for other businesses.
Despite these developments, Intel has announced a substantial $25 billion investment in a new Israeli factory, marking the largest-ever foreign investment in the country.
Tower’s Nasdaq-listed shares plummeted to $33.78, far below the $53 per share deal price.
Intel’s foundry business witnessed a surge in revenue to $232 million in Q2. Primarily from “advanced packaging,” a process that combines components of chips to create more powerful ones.
Cooling demand for Intel’s chips post-pandemic growth has prompted the company to implement cost-cutting measures.