The cancellation of Intel’s $5.4 billion acquisition of an Israeli chip company is the result of China’s refusal to approve the transaction in the face of escalating US-China tensions.
Both Intel and Tower Semiconductor agreed on the choice, the firms stated on Wednesday. The acquisition was scrapped, according to Intel, “due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement.”
Regulators from all over the world, including those in China, had to approve the deal. Despite the fact that Intel CEO Patrick Gelsinger visited China last month in an effort to secure their support, Chinese regulators were unable to approve the acquisition before the deadline on Wednesday.
The partnership between the two businesses was abandoned at a time when tensions between the United States and China are rising, especially in light of recent U.S. restrictions and increased export controls aimed at limiting China’s capacity to import and produce advanced technology.
As a result, it appears that China’s antitrust watchdog, the State Administration for Market Regulation, has been slow to approve mergers involving American corporations, including the Intel-Tower deal.
Prior to Janet Yellen’s trip to China last month, China put export restrictions on two metals used in computer chips and solar cells.
After failing to get approval from China, Intel revised its timetable from the first quarter of the year to the end of the year. With the purchase of Tower, Intel aimed to increase its manufacturing capacity and create new business prospects for the company in the United States, Israel, Italy, and Japan.
Tower will get a $353 million termination fee from Intel Corp., according to the American semiconductor behemoth.
The opening bell saw a decline of more than 9% for Tower’s U.S.-listed shares and more than 10% for Tel Aviv.
To support Pat Gelsinger’s vision for Intel’s foundry business, Tower was eager to join Intel, according to Russell Ellwanger, CEO of Tower Semiconductor, in a written statement. We value the efforts made by all parties.
