Intel Corporation, the world’s largest manufacturer of computer chips, recently abandoned its plan to acquire Tower Semiconductor for $5.4 billion, citing – according to a joint statement released by the two companies – “the inability to complete the transaction on terms expected.” This move could present a major setback to Intel’s strategy to modernize its operations by expanding its semiconductor manufacturing capabilities.
Intel’s plan to acquire Tower Semiconductor had been a key component of the company’s efforts to overhaul its chip-making operations. The acquisition was meant to provide Intel with an additional chip-making plant located in Israel, which would have made it easier for Intel to expand production at a lower cost. Intel hoped to use the plant to accelerate the introduction of its new 7-nanometer (nm) chip, which is set to be one of the most advanced chips on the market.
However, the failed acquisition leaves Intel without a major expansion to its existing manufacturing capacity, a significant setback for the company’s plans to modernize its operations. Intel had already begun construction on a new 7-nm chip production plant at a site near its headquarters in Santa Clara, California. But the failure of the Tower Semiconductor acquisition now leaves the company without a major expansion to its current capabilities.
The failed Tower Semiconductor acquisition is not the only setback Intel has encountered in its plans to modernize its chip-making operations. The company recently announced a delay of approximately six months to the launch of its 7-nm chips, citing “production delays” caused by the coronavirus pandemic. The delay is likely to cost Intel hundreds of millions of dollars in lost revenue as competitors such as AMD and Samsung continue to gain market share.
The failure of Intel’s Tower Semiconductor acquisition and the delay of the 7-nm chip launch present a significant challenge to the company’s strategy to modernize its operations. With no major expansion in production capabilities and delays to the introduction of its most advanced chip, Intel could find itself falling further behind its competitors in the race to keep up with ever-evolving semiconductor technology.