Intel Eyes Tower Semiconductor for $5.4B to Strengthen Manufacturing Capacity

Intel has been plagued with manufacturing challenges in the past two years, which are now only being exacerbated by severe supply chain shortages. In response, Intel announced its integrated device manufacturing (IDM) 2.0 plan in March 2021 to boost its manufacturing capacities and technology.

 

Intel will be purchasing Tower Semiconductor. Image used courtesy of Intel

 

So far, the company has been aggressive in this pursuit, recently dedicating billions to two new foundries in the midwest. Now, Intel is continuing its pursuit of improved manufacturing with the acquisition of Tower Semiconductor, a leading global analog device foundry. 

This article will discuss Tower Semiconductor, who they are, and what Intel seeks to gain through this acquisition.

 

Who is Tower Semiconductor?

Headquartered in Israel, Tower Semiconductor is an analog-specific foundry that has been a player in the industry for over three decades. 

Currently, the company has seven fabrication facilities located worldwide, specifically in Israel, the US, and Japan.

As a company, Tower generally serves high-growth markets such as mobile, automotive, and power. The company specializes in customized analog solutions while offering cutting-edge process technologies for applications, including 

• Radio frequency (RF)
• High-performance analog
• Integrated power management
• Complementary metal-oxide-semiconductor (CMOS) imaging sensors
• Micro-electromechanical system (MEMS)
• Mixed-signal CMOS 

On top of this, Tower claims expertise in materials such as silicon-germanium and offers customers extensive IP and EDA partnerships to streamline the manufacturing process.

 

Process nodes offered by Tower Semi for a given technology. Image used courtesy of Tower Semiconductor

 

Though Tower Semiconductor has been around for over three decades, in a deal announced earlier this week, Intel has agreed to purchase it for roughly $5.4B. 

The transaction is expected to be fully completed in 12 months, pending regulatory approvals. Intel aims to combine its and Tower's foundries to become one large foundry service.

 

Intel Increases Manufacturing Capacity 

For Intel, there are many benefits to acquiring Tower Semi, with the most important being that this merger will significantly improve the manufacturing capacity.

Mergers and acquisitions (M&As) happen fairly consistently in the semiconductor industry, but it always raises the question: what do they have to gain? 

For Intel, there are many benefits to acquiring Tower Semiconductor, with the most important being that this merger will significantly improve its manufacturing capacity.

Currently, Tower has a large operating presence in the US and Asia, where it has the capacity to provide fabless companies and integrated device manufacturers (IDMs) with more than 2 million wafer starts per year of capacity and growing. 

Thus, by acquiring Tower Semiconductor, Intel could significantly improve its manufacturing capabilities, specifically in those high-growth markets such as RF and power. 

Specifically, Tower's presence in Asia is vital for Intel as it aims to compete with Asia-based TSMC, which is currently the world's largest semiconductor manufacturer.

Intel also lauds that Tower's technology and manufacturing footprint complement Intel's capabilities in leading-edge processes, allowing the combined company to provide broader offerings to customers at scale. 

According to Intel, the addition of Tower helps to position Intel to bring more value to customers across the nearly $100 billion addressable foundry market.

 

Impact on Industry

As for the industry, the positive aspects of this acquisition are that the consolidation of these two fab's resources and capacity should mean higher output and efficiency. 

In a time when the semiconductor industry is suffering severe supply chain shortages, this merger will hopefully allow for higher output between the two companies, meaning more chip availability.