Intel is reportedly in talks to buy Tower Semiconductor, a specialty foundry with one 150-mm fab, five 200-mm fabs, and one 300-mm fab. The acquisition will add numerous clients to Intel's foundry business and specialists with extensive experience serving fabless chip designers if the reporting is accurate.
According to the Wall Street Journal, Intel could announce plans to acquire Tower Semiconductor for approximately $6 billion as early as this week. As a result, Intel would gain access to seven semiconductor production facilities located in three countries. There's a 150-mm and a 200-mm fab in Migdal Haemek, Israel; two 200-mm fabs in the United States (Newport Beach, California and in San Antonio, Texas); two 200-mm fabs in Japan; and one 300-mm fab in Japan. The fabs in Japan are controlled by TPSCo, which is co-owned by Tower (51%) and Nuvoton (49%). It remains to be seen what will happen to TPSCo following the transaction.
Tower specializes in producing various chips (including analog, sensors, MEMS, mixed-signal, RFCMOS, silicon photonics, PMICs, etc.) using so-called specialty process technologies like BiCMOS, SiGe, and SOI. These technologies aren't cutting edge, but the intended applications do not need to use the latest and greatest nodes. Instead, reliably pumping out large volumes is the primary motivation.
The specialty foundry business is generally very stable since the lifecycles of products such companies make are very long. In fact, even Intel outsources some of its products to Tower Semiconductor. Meanwhile, specialty foundries do not need to invest hefty amounts of money in research and development (R&D).
Tower competes against GlobalFoundries, Vanguard International Semiconductor, and United Microelectronics Corp. Some of Intel's products are also made at GlobalFoundries and UMC. Tower is the industry's sixth-largest contract maker of semiconductors, according to TrendForce, and its annual sales were around $1.3 billion in 2020.
