Report: Intel bids $6B to acquire Israeli chipmaker Tower Semiconductor

Intel Corp. is making another bid to expand its chip manufacturing operations. This time around, it’s reportedly negotiating to acquire the Israeli chipmaker Tower Semiconductor Ltd. for a price of around $6 billion, the Wall Street Journal reported.

The report cites people familiar with the matter as saying the deal could be announced as early as this week, though there is still a chance the talks could fall apart.

Tower is said to have a market value of around $3.6 billion, so Intel would be paying a pretty steep premium to acquire the company at the reported price.

Tower likely presents a tempting target for Intel though, even at that price. Intel has made no secret of its desire to expand its chip manufacturing capacity, not only to meet demand from its own customers amid a global shortage of silicon chips, but also to pursue its ambitions to become a chip contract manufacturer and make chips for other companies besides itself.

Notably, Intel recently tried and failed to acquire GlobalFoundries Inc., a much larger chip manufacturer that was previously owned by Advanced Micro Devices Inc. It’s believed Intel did place a bid for that company, but the offer was ultimately rejected, with GlobalFoundries’ owner, Mubadala Investment Co., an investment arm of the Abu Dhabi government, deciding to opt for an initial public offering instead. GlobalFoundries now trades on the Nasdaq index and has a market value of about $30 billion.

Tower also trades on the Nasdaq. It’s a smaller operation but it has a pretty wide area of focus, manufacturing semiconductors for cars, consumer products, medical and industrial equipment, the Journal said. It has production sites in California, Texas, Israel and Japan, with its headquarters based in Migdal HaEmek, Israel.

Intel has already announced plans to invest around $20 billion to build new chip-making capacity at its existing U.S. facilities in Ohio. Intel Chief Executive Pat Gelsinger (pictured) said the extra capacity would be up and running by 2025, and that Ohio site may eventually grow to accommodate eight fabs, though doing so would require spending of around $100 billion.

Overall, Intel has currently pledged to make more than $100 billion worth of investments around the world to build out its chip making capacity, with additional sites earmarked for Europe as well.

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