Semiconductor giant Intel (NASDAQ: NASDAQ:INTC) and Tower Semiconductor (NASDAQ: NASDAQ:TSEM) have announced a new partnership on Tuesday, following the collapse of their proposed $5.4 billion acquisition deal earlier this year. The previous acquisition, which was announced in February 2022, fell through due to China's refusal to approve the deal, leading Intel to pay a $353 million termination fee to Tower.
Under the newly announced agreement, Tower will invest up to $300 million to acquire and install equipment in Intel's advanced semiconductor manufacturing facility in New Mexico. This investment is expected to provide capacity for more than 600,000 photo layers per month, helping Tower meet customer demand for its products.
The alliance will also see Tower manufacture products on two of its 65nm manufacturing platforms at Intel's New Mexico facility. These products include power management chips and radio frequency chips. Tower CEO Russel Ellwanger stated that they see this as a "first step toward multiple unique synergistic solutions with Intel."
The collaboration is seen as a significant step forward for Intel's foundry business, and it comes just days after Intel disclosed receiving a large prepayment from an unnamed customer to secure manufacturing capacity for the Intel 18A process. Expected to be ready for production by the end of 2024, this cutting-edge process is anticipated to deliver a manufacturing advantage over foundry market leader TSMC.
Intel has reworked one of its older processes as "Intel 16" and has gained full support from major third-party chip design tool providers for this mature process. By manufacturing a wide variety of chips, Intel aims to capture a large share of the enormous global foundry services market.
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