Intel announces foundry services deal with Tower Semiconductor after acquisition deal fails

Intel has announced a deal that it will provide foundry services to Tower Semiconductor. As per the latest deal Tower Semiconductor will invest $300 million to acquire and own equipment and other fixed assets that will be installed at the Intel's New Mexico factory.

The partnership comes less than a month after both companies dropped their plans to merge as the proposed $5.4-billion deal failed to secure approval from regulators in China.

Tower will gain a production capacity of over 600,000 photo layers per month at the site, helping the chipmaker support demand for the next generation 300 mm chips.

"We see this as a first step towards multiple unique synergistic solutions with Intel," Tower CEO Russell Ellwanger said.

"This collaboration with Intel allows us to fulfill our customers' demand roadmaps, with a particular focus on advanced power management and radio frequency silicon on insulator (RF SOI) solutions, with full process flow qualification planned in 2024."

With this deal Intel will strengthen its foundry capacity as it advances on rivals such as Taiwan Semiconductor Manufacturing Co.

In 2021, $3.5 billion investment was committed by Intel to the New Mexico facility and a year later announced a $20-billion investment towards a chip-making complex in Ohio.

In the second quarter, Intel's foundry business reported revenue of $232 million, up from $57 million a year earlier.

The rise in foundry sales came from "advanced packaging," a process in which Intel can combine pieces of chips made by another company to create a more powerful chip.