Tower is investing $300 million in Intel facility in New Mexico as part of major partnership. This came after China thwarted an earlier Intel takeover bid.

Intel and Tower Semiconductor are entering into an important partnership. Under the terms of the agreement, Tower Semiconductor will have its 65nm BCD chips built at Intel’s Fab 11X in New Mexico, USA. Tower itself will invest up to an additional $300 million in this factory. With this money it buys materials and machines that are housed in the Intel factory.

The collaboration thus seems to take the form of a kind of colocation agreement for chip production. Tower will purchase its own equipment while Intel will provide location and support. Tower gains access to large new 300mm wafer capacity in US. Today the company already has factories in the USA, Israel, Japan and Italy.

Failed takeover

Originally, Intel was keen to take over Tower Semiconductor. CEO Pat Gelsinger offered $5.4 billion for it. The acquisition had to support the new Intel Foundry Services (IFS). With IFS, Intel opens up its extensive know-how and capacities in chip production to third parties and thus effectively competes with TSMC. IFS only saw the light of day in 2021. Previously, Intel has only commercialized its manufacturing capabilities to a very limited extent.

The acquisition has been approved internationally except in China. There, the regulatory authority kept everyone involved on their toes, so that the deal ultimately fell through. This happened most likely for political reasons. Through the newly announced partnership, Tower Semiconductor and Intel are now going together, even if the form of this cooperation is completely different.