Intel and Tower Semiconductor announced their strategic alliance on Tuesday, ushering in a fresh era of cooperation in the semiconductor industry. This historic partnership follows closely on the heels of the abandonment of their $5.4 billion merger plans, a move prompted by the absence of regulatory approval from Chinese authorities.
Under the terms of this transformative agreement, Tower Semiconductor, an Israeli contract chipmaker, will infuse a substantial $300 million into Intel’s state-of-the-art factory located in New Mexico. Tower Semiconductor will acquire and assume ownership of critical equipment and fixed assets, which will be installed at Intel’s Rio Rancho fabrication unit. This strategic move will bolster Tower Semiconductor’s production capacity to an impressive 600,000 photo layers per month at the facility, thereby positioning them to meet the escalating demand for cutting-edge 300mm chips.
“We view this collaboration as a pivotal first step toward forging multiple unique synergistic solutions in partnership with Intel,” remarked Tower Semiconductor’s CEO, Russell Ellwanger. He underscored the significance of this collaboration in enabling Tower Semiconductor to fulfill their customers’ evolving demand roadmap, with a particular emphasis on advanced power management and radio frequency silicon on insulator (RF SOI) solutions.
The partnership not only marks a significant stride for Tower Semiconductor but also holds strategic value for Intel. As Intel aims to reinforce its foundry capacity and emerge as a formidable contender in the semiconductor arena, this collaboration takes on added significance. Notably, Intel has been striving to compete head-to-head with the industry giant, Taiwan Semiconductor Manufacturing Co.
In a show of commitment to their expansion plans, Intel had previously pledged $3.5 billion to the New Mexico facility in 2021. The following year, Intel unveiled a colossal $20 billion investment earmarked for a cutting-edge chip-making complex located in Ohio. The investments align with Intel’s strategy to enhance its position in the foundry business, a move that has yielded promising results. As evidenced by Intel’s second-quarter results in 2021, their foundry business reported a staggering revenue of $232 million, marking a substantial increase from the previous year’s $57 million. This boost in revenue was attributed to Intel’s prowess in combining components from various chip manufacturers, a process commonly referred to as “advanced packaging.”
The collaboration between Intel and Tower Semiconductor is poised to have a far-reaching impact on the chip-making landscape. It is expected to fuel innovation, drive growth, and open up new avenues for both companies to thrive in an increasingly competitive industry.
In conclusion, the alliance between Intel and Tower Semiconductor signifies a testament to the power of innovative collaboration in the semiconductor sector. This strategic partnership heralds a new chapter of growth and opportunity for both companies, as they remain steadfast in their commitment to maintaining their competitive edge and delivering exceptional value to their customers. The $300 million investment by Tower Semiconductor in Intel’s New Mexico factory sets the stage for a brighter future in semiconductor manufacturing, and industry stakeholders are closely watching to see the fruits of this momentous collaboration.