Tower Semiconductor, Intel Blames Chinese Regulatory Authorities Over Cessation of $5.4 Bn Agreement

Published  August 17, 2023   0
S Staff
Intel-Tower Semiconductor Contract

CEO of Intel Pat Gelsinger traveled to China recently to discuss the matter with the government officials, but it turned to be successful

After several months of heated discussions, the agreement between US based Chip giant Intel and Israel’s contract chip manufacturer Tower Semiconductor has ceased finally. According to media reports, the $5.4 billion agreement has been mutually terminated because they were constantly failing to grab regulatory approvals on time. 

In the meantime, Tower Semiconductor lost 9 percent of its share both in the US and in Tel Aviv. The company’s official spokesperson told the media that a termination fee of $353 million will be given by Intel to Tower. A year back, both the companies signed their mutual agreement. Reuters on the other hand recently stated that both the companies are yet to provide further details on the grants of regulatory approvals. 

Reuters is the first news agency that reported on the termination of the contract and on Tuesday it stated exclusively that Intel would put an end to the deal as it already expired without any regulatory approval from China. When the media approached Tower for the details, it said, “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.”

CEO of Intel Pat Gelsinger also mentioned that he worked equally hard to get regulatory approvals from China, and traveled to China recently to discuss the matter with the government officials. Other than the Tower matter, Intel also added that it is heavily in its foundry division that manufacture semiconductors for various businesses. 

It clearly shows how geopolitical tussles are escalating between US and China and a similar thing happened a year back when an American chemical firm DuPont De Nemours Inc had terminated a $5.2 billion contract to acquire electronics materials manufacturer Rogers Corp as there were massive delays in getting regulatory approvals from the Chinese authorities. Israel Prime Minister Benjamin Netanyahu in June this year had proclaimed that Intel had decided to invest $25 billion to set-up a top-notch manufacturing unit in Israel, which was scheduled to begin its operation in 2027.