Key points:
- Intel hone in in chip shortage with $5.4B acquisition of Tower Semiconductor
- The move is a further addition on plans to build two Ohio chip-making facilities
- Semiconductors are at the forefront of modern innovation – Intel are back in the game
In a smart move to capitalize on global shortages, tech monolith Intel acquired Israeli-based Tower Semiconductor for a total of $5.4B. In the face of a relentless chip shortage, companies are seeking ways to stabilize supply routes in order to meet growing demand. Partnerships or acquisitions like these provide Intel with more manufacturing security moving forward.
Intel will pay $53 per share in cash towards Tower Semiconductor; resulting in Tower stock surging over 50% in Tuesday premarket trading. INTC stock is currently showing a premarket loss of 0.10%. The deal has already been approved by both companies’ board members and is thus expected to reach completion in around 12 months. At a time when chip production is at the forefront of technological innovation, Intel’s acquisition puts the company firmly back in the race, which has recently seen Taiwan Semiconductor Manufacturing and Samsung edge into the lead.
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This isn’t the first of Intel’s efforts to ramp up its chip-making; the company announced last month its planned investment of over $20B for the production of two chip factories in Ohio. For investors, today’s acquisition of Tower will reap quicker rewards for the company, as the Ohio factories won’t be active for another few years. Tower will provide Intel with the short-term kickstart it needs to remain competitively placed, while the Ohio factories plant the seeds for the coming years.
A spokesperson from Intel stated:
“The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint, and technology portfolio to address unprecedented industry demand,”
Intel has acted swiftly with regards to the global shortage, and although INTC stock currently trades 24% lower than this time last year – investors should be aware that Intel has all the necessary grounds to win bulls back in the long term.