China has torpedoed chip giant Intel’s plan to boost its manufacturing business with a multi-billion dollar purchase of Israeli company Tower Semiconductor. After the required approval from Chinese competition watchdogs failed to materialize by the end of the targeted deadline for the completion of the takeover, Intel abandoned the deal. Tower now gets compensation of 353 million dollars (323 million euros).
There is currently a tangible dispute between the USA and China over technology components. Washington wants to deny Beijing access to advanced technology related to chips and artificial intelligence as far as possible, while the People’s Republic counters with export bans on important raw materials. In the case of large takeovers worldwide, the approval of the Chinese competition authorities is also required.
Intel announced in February 2022 that it wanted to acquire Tower for $5.4 billion. Originally, around twelve months were planned for the conclusion of the deal. Intel boss Pat Gelsinger is currently working on establishing the group as a manufacturer for other providers and on competing with the world’s largest chip contract manufacturer TSMC from Taiwan. Tower was an important part of this strategy. The Israeli company specializes in semiconductor products for cars and cameras, among other things, and would thus have supplemented Intel’s own factories.
Intel has been slowed down several times in recent years by the fact that new chip generations came onto the market much later than announced due to problems in development. Gelsinger promises to bring the group back into the lead with new production processes. With its processors, Intel is currently very dependent on the development of the PC market, which recently slumped after the boom in the corona pandemic. When it comes to technology for data centers, Intel faces more competition from smaller arch-rival AMD, but also from graphics card specialist Nvidia, whose chips are particularly well suited for applications with artificial intelligence.