Intel signs new agreement with Tower Semiconductor

Previously, Intel announced its intention to acquire Israeli semiconductor manufacturer, Tower Semiconductor, for $5.4 billion, in a bid to swiftly augment its production capacity and foundry scope. However, this acquisition was ultimately aborted by Intel, as the requisite regulatory approvals stipulated in the purchase agreement were not secured within the deadline.

Less than a month following this unsuccessful acquisition, on September 5th, Intel proclaimed a newly inked agreement with Tower Semiconductor. Under this accord, Intel commits to offering foundry services and 300mm manufacturing prowess to Tower Semiconductor, facilitating the latter in servicing its global clientele. Concurrently, Tower pledges an investment of $300 million in Intel’s New Mexico facility, designated for equipment acquisition and other capital assets. Intel avers that, through this factory, Tower will secure a production capability exceeding 600,000 photo layers monthly, catering to the demands of next-generation 12-inch chips.

In response, Tower CEO Russell Ellwanger said, “We are excited to continue working with Intel. As we look to the future, our primary focus is to expand our customer partnerships through high-scale manufacturing of leading-edge technology solutions. This collaboration with Intel allows us to fulfill our customers’ demand roadmaps, with a particular focus on advanced power management and radio frequency silicon on insulator (RF SOI) solutions, with full process flow qualification planned in 2024. We see this as a first step towards multiple unique synergistic solutions with Intel.”

The rationale behind Intel’s agreement with Tower Semiconductor is to fortify its foundry competencies. In March 2021, Intel’s CEO, Pat Gelsinger, unveiled the “IDM 2.0” strategy, envisioning the establishment of a world-class Intel Foundry Service (IFS) to challenge industry frontrunners like TSMC.