Intel Corporation (NASDAQ:INTC) has unexpectedly axed its US$5.4 billion acquisition of Tower Semiconductor, with unnamed sources close to the deal citing regulatory complications and potential integration challenges.
The deal, struck in late 2022, was previously described as a strategic expansion for Intel, expanding its semiconductor manufacturing capabilities amid the global chip shortage.
Walking away will be seen as a setback for Intel’s expansion in the current ‘semi-conductor race’, as sector rivals continue to scramble to meet the overwhelming demand for more compute as artificial intelligence, virtual reality and crypto technologies have boomed in recent years.
Nonetheless, it is reported that growing antitrust concerns seem to have overshadowed the perceived benefits of the deal as it would need to clear a stringent regulatory environment in multiple jurisdictions.
At the same time, reports suggest that the subsequent integration of the businesses might prove to be more cumbersome than Intel initially estimated.
Intel stock was practically unmoved in early premarket dealing, priced at US$34.83 which values the chipmaker at just over US$145.6 billion.
“We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs,” said Intel chief executive Pat Gelsinger.
“Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future.”