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2022-02-15 18:21

Intel Corporation closed up 2.0% after the company signed a formal deal with Tower Semiconductor in which Intel would buy Tower for $53 per share in cash, for a net enterprise value of $5.4 billion. Intel’s stock now trades at a PE multiple of 9.97.

Intel's IDM 2.0 plan will be greatly advanced as the business develops its production capacity, worldwide location, and technology portfolio to meet enormous market growth.

How does the acquisition fits with Intel?
Intel is the only cutting-edge company having both R&D and production facilities in the United States. The company has recently reported its capacity expansions in Arizona and New Mexico, as well as plans to create a new mega-site in Ohio.

Tower's technology and production footprint match Intel's IFS capabilities in cutting-edge processes, allowing the merged entity to offer clients a greater range of products at scale. Intel is well positioned to provide additional value to clients in the approximately $100 billion addressable foundry industry with the integration of Tower.

Intel founded Intel Foundry Services (IFS) in March 2021 as part of their IDM 2.0 strategy. The goal was to help the company in fulfilling the increasing international demand for semiconductor fabrication capacity and to establish itself as a significant provider of foundry capacity in the United States and Europe to service clients worldwide.

IFS presently provides cutting-edge process and packaging technologies, as well as committed capacity in the United States and Europe, as well as a large intellectual property (IP) portfolio in the future. The CEO of Intel, Pat Gelsinger, said:

"Tower’s specialty technology portfolio, geographic reach, deep customer relationships and services-first operations will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally."

A sneak peek into Tower Semiconductor
Tower's specialty technology expertise will provide worldwide coverage for both Intel and Tower's clients. Tower focuses on high-growth industries including mobile, automotive, and energy. Tower has a geographically balanced foundry footprint in the United States and Asia, supplying both fabless firms and IDMs, with a capacity of more than 2 million wafer starts per year.

Tower also offers design services and capabilities, as well as a foundry-first customer strategy with the best customer support web and IP storefront. Russell Ellwanger, Tower CEO said:

"With a rich history, Tower has built an incredible range of specialty analog foundry solutions based upon deep customer partnerships, with worldwide manufacturing capabilities. I could not be prouder of the company and of our talented and dedicated employees."

The Nasdaq-listed shares of Tower Semiconductor closed up roughly 40% on Tuesday. The stock now trades at a PE multiple of 39.86.