Cooperation instead of takeover

The takeover failed because of China's objection, now Intel and Tower are cooperating in other ways: Tower is using Intel's fab in New Mexico.

The two companies reached an agreement just days after the acquisition fell through that gives Tower Semiconductor access to capacity at Intel's "Fab 11X" in Rio Rancho, New Mexico, to serve its global customers. Tower will buy its own equipment for up to $300 million, which will be installed in Intel's 300mm fab. Tower will use the equipment to meet projected customer demand for analog ICs fabricated on 300-mm wafers. The "Fab 11X" will manufacture chips using Tower's processes, including the 65-nm BCD and 65-nm HF silicon-on-insulator processes. 

"We founded IFS with the long-term goal of building the world's first open-system foundry that provides a secure, sustainable and robust supply chain connected to our ecosystem. We are pleased that Tower sees the value we offer and has selected us to manufacture in the U.S. on 300mm wafers," said Stuart Pann, SVP of Intel and general manager of IFS. 

"Working with IFS, we will be able to manufacture the chips our customers will need in the future, especially with regard to the latest power management and RF silicon-on-insulator ICs. Process qualification will occur in 2024," said Russell Ellwanger, Tower CEO. 

This will allow Tower to expand its manufacturing capabilities to attract new customers who require chips manufactured using the 65nm BCD power and RF SOI processes. Based on the collaboration, Tower plans to not only expand its capacity to produce chips using existing processes, but also partner with customers to develop new processes for upcoming chip generations.  

Due to the objection of the Chinese antitrust authority, Intel had called off the planned takeover on August 16. Therefore, according to the terms of the purchase agreement, Intel must pay Tower a settlement of $353 million.