Intel to offer foundry services to Tower Semiconductor after acquisition deal falls through

Tower Semiconductor

05/09/2023 12:56

Sept 5 (Reuters) - Intel  INTC.O  will offer foundry
services to Tower Semiconductor  TSEM.TA  in a new deal that
will see the Israeli contract chipmaker invest $300 million in
Intel's New Mexico factory, the companies said on Tuesday.
    The partnership comes less than a month after both companies
dropped their plans to merge as the proposed $5.4-billion deal
failed to secure approval from regulators in China. 
    Under the latest agreement, Tower will acquire and own
equipment and other fixed assets to be installed at the Rio
Rancho fabrication unit. 
    It will gain a production capacity of over 600,000 photo
layers per month at the site, helping the chipmaker support
demand for the next generation 300 mm chips. 
    "We see this as a first step towards multiple unique
synergistic solutions with Intel," Tower CEO Russell Ellwanger
said.
    "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."
    The deal also strengthens Intel's foundry capacity as it
advances on rivals such as industry leader Taiwan Semiconductor
Manufacturing Co. 
    In 2021, Intel committed $3.5 billion to the New Mexico
facility and a year later announced a $20-billion investment
towards a chip-making complex in Ohio. 
    In the second quarter, Intel's foundry business reported
revenue of $232 million, up from $57 million a year earlier.
    The rise in foundry sales came from "advanced packaging," a
process in which Intel can combine pieces of chips made by
another company to create a more powerful chip.
    

 (Reporting by Yuvraj Malik in Bengaluru; Editing by Shweta
Agarwal)
 ((yuvraj.malik@thomsonreuters.com;))