HONG KONG (AP) — Intel will finalize its $5.4 billion deal to acquire Israeli chipmaker Tower Semiconductor after China failed to sign on to the deal amid Escalating tensions with the United States.
The two companies said on Wednesday that the decision was a mutual one between Intel and Tower. Intel said the deal was terminated “due to an inability to obtain in a timely manner the regulatory approvals required under the merger agreement”.
US semiconductor giant Intel said it would pay Tower a $353 million termination fee.
The deal required regulatory approval from several regulators around the world including China, but Chinese regulators had not greenlighted the deal by the August 15 deal deadline, even after Intel CEO Patrick Gelsinger flew to China last month on try to win them over.
The spoiler deal between the two companies comes amid rising tensions between the US and China, especially as the US has tightened export controls and imposed restrictions aimed at crippling China’s ability to buy and manufacture advanced chips.
In response, China’s antitrust regulator, the State Administration for Market Regulation, appears to have been slow to approve mergers involving US companies, such as the Intel Tower deal.
Intel originally intended to close the deal by the first quarter of the year, but later extended the deadline after failing to win approval from China. Intel hopes that its acquisition of Tower will expand its manufacturing capacity and open up growth opportunities for the company in the United States, Israel, Italy and Japan.
Tower’s share price fell more than 11% in pre-market trading in the US. The company’s share price in Tel Aviv also fell by more than 10%.
“Tower was very excited to join Intel to enable Pat Gelsinger’s vision for the Intel foundry business,” Tower Semiconductor CEO Russell Ellwanger said in a statement. “We appreciate the efforts of all parties.”