Paying over $300 million in liquidated damages, Intel terminates acquisition of Gaota Semiconductor: unable to obtain regulatory approval Gaota | Intel | liquidated damages
The acquisition of Gaota by American chip giant Intel has failed.
On August 16th, Intel announced the termination of its acquisition plan for Tower Semiconductor due to the inability to obtain timely regulatory approval for the transaction. According to the terms of the merger agreement and the termination of the agreement, Intel will pay a termination fee of $353 million to Gaota.
Gaota Semiconductor stated in a statement, "After careful consideration and thorough discussion, there have been no signs of any necessary regulatory approvals received, and both parties agree to terminate the merger agreement after August 15, 2023."
Intel and Gaota announced this transaction in February last year, when Intel stated that it would take "approximately 12 months" to complete the transaction. Last October, the chip manufacturer announced plans to complete transactions in the first quarter of 2023, but later warned in March that this date may be postponed to the second quarter.
The acquisition of Gaota by Intel initially attracted widespread attention in the industry and was also an important strategic deployment for Intel to strengthen its wafer foundry business. Intel is joining the wafer foundry market led by TSMC and Samsung, and Gaota has its own technology and customers in specific areas, which can help Intel improve its competitiveness. However, the difficulties in regulatory approval led to the failure of this acquisition plan.
Gaota Semiconductor is an Israeli wafer foundry that produces various types of chips using special processes, including analog, sensor, MEMS, mixed signal, RFCMOS, and PMIC. Although the technology is not the latest and most advanced, the business is usually very stable and the product lifecycle is relatively long. The semiconductors and circuits produced by Gaota are widely used in fields such as automobiles, consumer products, medical and industrial equipment.
However, in its latest official statement, Intel CEO Pat Gelsinger stated that the company's foundry is crucial for unleashing the full potential of IDM 2.0 and will continue to advance its roadmap in this area, regaining leadership in transistor and power performance by 2025.
Intel announced that its wafer foundry business saw a year-on-year growth of over 300% in revenue for the second quarter of 2023. In addition, Intel recently reached an agreement with Synopsys to develop an intellectual property portfolio for Intel 3 and Intel 18A process nodes, which also highlights Intel's significant progress in the field of foundry.
Stuart Pann, Senior Vice President and General Manager of Intel's wafer foundry business, stated that as the world's first open systems foundry, Intel is building a differentiated customer value proposition. The company's technology portfolio and manufacturing expertise, including packaging, chip standards, and software, go beyond traditional wafer manufacturing.
In June of this year, Israeli Prime Minister Netanyahu announced that Intel would invest $25 billion to build a new factory in Israel, marking the largest international investment in Israeli history. The new factory is expected to start production in 2027 and operate until at least 2035, employing thousands of employees. With the announcement of Intel's new factory in Israel, the outside world began to bearish the deal between Intel and Tower. At present, the transaction is terminated, and Gaota has to reconsider its development direction.
