The Chinese authorities did not approve it, and as a result, the acquisition of the Israeli chip manufacturer, Tower Semiconductor, by the global company Intel has been canceled. The acquisition was planned to be worth $5.4 billion, but now Intel will pay cancellation fees amounting to $353 million and will withdraw from the transaction.
The acquisition was planned as part of Intel's new strategy to produce chips based on orders from various companies, not just for organizational use. As a result, Intel engaged in acquisition processes of several chip manufacturers around the world, including the Israeli manufacturer Tower Semiconductor from Migdal HaEmek.
The reason for the cancellation of the deal is the lack of approval from the Chinese regulator by the contractual deadline. As the deadline has passed and the approval was not granted, the purchase agreement has been canceled.
In response to the acquisition cancellation, Pat Gelsinger, CEO of Intel, stated: "We continue to work according to the roadmap we have built and invest significantly to deliver the diverse and flexible chip production the world needs. Our respect for Tower Semiconductor has only grown throughout this process, and we will continue to seek opportunities to collaborate with them in the future."
The impact of the chip war between China and the US
No official reason was given for the non-approval by the Chinese regulator, but it can be speculated that it is related to the global chip war between China and the United States.
The current administration in the United States, under President Biden, is leading an embargo on the export of advanced chips to China, in order to prevent it from acquiring advanced technological capabilities that could threaten American empowerment. In response, China has prohibited the export of critical semiconductor components.
In order to continue its operations in China without being adversely affected by the chip war, Intel is obligated to obtain approval from the Chinese regulator for the transactions it conducts. It's possible that a Chinese strategy, as part of the chip war, is the true reason behind the handling of the deal.
