The microchips shortfall crisis has triggered a bunch of strategical movements by companies and governments, not only to secure supply but also to gain a well positioned foothold to milk the chips manufacturing and connected business segments demand in the near future.
Latest strategical movements to grab the semiconductors competitive advantage include, among others, the announcement today of Intel’s purchase of Tower Semiconductor in Israel for $5.4Bn; the MOU signed between the Taiwanese Foxconn and Vedanta to establish a jv devoted to manufacture semiconductors in India and the announcement by the European Union Commission last week of a proposal for a Chips Regulation to mobilise €15Bn in order to locate in the territory of the EU the 20% of the world production of microchips by 2030.
Intel acquires Tower Semiconductors for 5.4Bn
Intel Corporation and Tower Semiconductor a leading foundry for analog semiconductor solutions, today announced a definitive agreement under which Intel will acquire Tower for $53 per share in cash, representing a total enterprise value of approximately $5.4 billion. The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand.
As a key part of its IDM 2.0 strategy, Intel established Intel Foundry Services (IFS) in March 2021 to help meet the growing global demand for semiconductor manufacturing capacity and to become a major provider of U.S.- and Europe-based foundry capacity to serve customers globally. IFS currently offers leading-edge process and packaging technology, committed capacity in the U.S. and Europe and other geographies in the future, and a broad intellectual property (IP) portfolio.
Intel is the only leading-edge player with both research and development and manufacturing in the U.S., including recently announced capacity expansions in Arizona and New Mexico, as well as plans to build a new mega-site in Ohio. Tower’s technology and manufacturing footprint is highly complementary to Intel’s IFS capabilities in leading-edge processes, allowing the combined company to provide broader offerings to customers at scale. With the addition of Tower, Intel is strongly positioned to bring more value to customers across the nearly $100Bn addressable foundry market.
Tower Semiconductor’s purchase by Intel is expected to close in approximately 12 months. It has been unanimously approved by Intel’s and Tower’s boards of directors and is subject to certain regulatory approvals and customary closing conditions, including the approval of Tower’s stockholders.
IFS and Tower Semiconductor will run independently until deal closure; IFS will continue to be led by Randhir Thakur (President of Intel Foundry Services), and Tower will continue to be led by Russell Ellwanger during this time. Upon the close of the transaction, Intel’s intent is for the two organizations to become a fully integrated foundry business. The company will share more details on integration plans at that time.
Tower’s expertise in specialty technologies, such as radio frequency (RF), power, silicon-germanium (SiGe) and industrial sensors, extensive IP and electronic design automation (EDA) partnerships, and established foundry footprint will provide broad coverage to both Intel and Tower’s customers globally. Tower serves high-growth markets such as mobile, automotive and power. Tower operates a geographically complementary foundry presence with facilities in the U.S. and Asia serving fabless companies as well as IDMs and offers more than 2 million wafer starts per year of capacity, including growth opportunities in Texas, Israel, Italy and Japan. Tower also brings a foundry-first customer approach with an industry-leading customer support portal and IP storefront, as well as design services and capabilities.
“With a rich history, Tower has built an incredible range of specialty analog foundry solutions based upon deep customer partnerships, with worldwide manufacturing capabilities. I could not be prouder of the company and of our talented and dedicated employees,” said Russell Ellwanger, Tower CEO. “Together with Intel, we will drive new and meaningful growth opportunities and offer even greater value to our customers through a full suite of technology solutions and nodes and a greatly expanded global manufacturing footprint. We look forward to being an integral part of Intel’s foundry offering.”
Dr. Randhir Thakur, president of Intel Foundry Services, said: “We are thrilled to welcome the Tower team to Intel. Their decades of foundry experience, deep customer relationships and technology offerings will accelerate the growth of Intel Foundry Services. We are building Intel Foundry Services to be a customer-first technology innovator with the broadest range of IP, services and capacity. Tower and IFS together will provide a broad portfolio of foundry solutions at global scale to enable our customers’ ambitions.”
Foxconn-Vedanta joint venture, first MOU on chips manufacturing in India after release of Modi’s Electronics Manufacturing & PLI scheme
Vedanta, one of the leading multinational groups from India and Hon Hai Technology Group (Foxconn), one of the leading electronics manufacturing companies worldwide have signed a memorendum of understanding (MOU) aimed to form a joint venture company that will manufacture semiconductors in India.
This agreement supports Indian Prime Minister Narendra Modi’s vision to create an ecosystem for semiconductor manufacturing in India.
In fact, the collaboration between Vedanta and Foxconn follows the India Government’s recent policy announcement for Electronics Manufacturing & PLI scheme for incentivizing organizations to contribute towards development of this sector. This will be the first joint venture in the electronics manufacturing space after the announcement of the policy.
Vedanta will hold the majority of the equity in the JV, while Foxconn will be the minority shareholder and Vedanta Chairman Anil Agarwal will be the Chairman of the joint venture company.
The targeted project plans to invest for manufacturing semiconductors and will provide a significant boost to domestic manufacturing of electronics in India. Discussions are currently ongoing with a few State Governments to finalize the location of the plant.
Chips Act channeling billionaire investment, already proposed by EU Commission
The European Union is determined to increase its share of the global chip manufacturing market from 9% to 20% by 2030. And it will mobilize around €15Bn in public and private investment to achieve this.
This €15Bn will be added to the €30Bn already available for public digital investments that are being channeled through the NextGenerationEU, Horizon Europe funds or the national budgets of the Member States.
The aforementioned funds will be distributed under the future European Chips Act in which the objectives and other necessary regulations will be set in order to avoid bottlenecks derived from the shortage and delay in the supply of this type of component, but also and in the longer term to make the EU a leader in the world market for microchips. A market in clear growth and of great strategic importance from the industrial point of view.
The funds and the action of the EU in the field of these components will be oriented to support especially technological SMEs, without prejudice to the start-up and support of large projects within this sector.
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Related Eastwind links (Spanish edition):
Lecciones aprendidas de la pandemia: La UE movilizará más de €15.000 millones para localizar en su territorio el 20% de la producción mundial de microchips de aquí a 2030
(Lessons learned from the pandemic: The EU will mobilize more than €15 billion to localize 20% of the world’s microchip production on its territory by 2030)