Strengthen OEM business!Intel to buy Tower Semiconductor to catch up with TSMC

2022-06-11 0 By

Intel Corp is nearing a deal to buy Israeli chip maker Tower Semiconductor for about $6 billion, Reuters reported, citing people familiar with the matter.The potential acquisition would deepen Intel’s position in the global semiconductor foundry industry, narrowing the gap with TSMC, the world’s leading manufacturer, as it seeks to advance its strategy of manufacturing chips for other companies.A deal could be announced as early as this week if talks do not break down, people familiar with the matter said.Shares in Hightower surged more than 50 per cent in after-hours trading on the news.The stock closed down 2 per cent at $33.13 in regular trading, giving it a market capitalisation of about $3.6bn.Intel edged up just 0.27 percent after the bell.Hightower produces chips used in a wide range of applications, including automobiles, consumer products, medical and industrial equipment.The company has manufacturing facilities in Israel, California, Texas and Japan, according to its website.Intel is making a big bet on contract manufacturing similar to Hightower and U.S. contract chipmaker GlobalFoundries.Intel had also sought to acquire Chip For about $30 billion, but The chipmaker opted instead to go public.Intel CEO Pat Gelsinger unveiled its IDM 2.0 strategy last March, with plans to return to the foundry business.According to the world’s top 10 FABs for 2021, which was completed by Digitimes last month, TSMC remains the leader (with a market share of about 59.5 percent), followed by Samsung Electronics (8.7 percent), UMC (7.9 percent), Grichip (6.9 percent) and Tower (1.6 percent).Not only acquisitions, Intel has recently been aggressively expanding capacity.The company said last month it would invest as much as $100bn to build the world’s largest chip manufacturing facility in Ohio.The move is aimed at restoring Intel’s dominance in chip manufacturing and reducing US reliance on Asian chipmaking.For more than a year, a global shortage of semiconductors has hampered production of everything from smartphones to cars.Fabs are ramping up investment and launching rare large-scale expansion plans amid a continuing chip shortage.