HONG KONG (AP) — Intel will terminate a $5.4 billion deal to acquire Israeli chip maker Tower Semiconductor after China failed to sign the deal amid rising tensions with the United States.
It was a mutual decision between Intel and Tower, the companies said Wednesday. Intel said the deal was terminated “because of its inability to timely obtain regulatory approvals required under the merger agreement.”
Intel Corp. will pay Tower a $353 million termination fee, the US semiconductor giant said.
The deal required regulatory approval from several regulators worldwide, including China, but Chinese regulators failed to green-light the deal before the Aug. 15 transaction deadline, even after Intel CEO Patrick Gelsinger traveled to China last month in an effort to get them ahead of him. to win.
The scuttled deal between the two companies comes amid growing tensions between the US and China, especially as the US has tightened export controls and imposed restrictions to cripple China’s ability to buy and produce advanced chips.
In response, China’s antitrust regulator, the State Administration for Market Regulation, appears to have trailed in approving mergers involving US companies, such as the Intel-Tower deal.
Intel originally intended to close the deal in the first quarter of the year, but later extended the deadline after failing to get approval from China. Intel hoped that the acquisition of Tower would increase its production capacity and provide growth opportunities for the company in the US, Israel, Italy and Japan.
Tower’s share price fell more than 11% in US pre-market trading. The company’s share price in Tel Aviv also fell by more than 10%.
“Tower was very pleased to join Intel in enabling Pat Gelsinger’s vision for Intel’s foundry business,” Russell Ellwanger, CEO of Tower Semiconductor, said in a statement. “We appreciate the efforts of all parties.”
