Intel buys Gaota Semiconductor at a premium of 60% and takes a fancy to its chip foundry capability.

It took less than 24 hours from the rumor to the landing of Intel's plan to buy an Israeli fab.

On the evening of Feb. 15, Beijing time, Intel Guanxuan announced that it would buy Gaota Semiconductor (Tower Semiconductor), with a total value of more than $5.4 billion (about 34.3 billion yuan) at a cash price of $53 per share.

The purchase price of $53 is 60% higher than the current price of Gaota Semiconductor. As of Feb. 14, Gaota Semiconductor shares were trading at 33.13 yuan, with a total market capitalization of $3.577 billion (22.7 billion yuan).

The deal is expected to close in about 12 months, and Intel plans to fund the acquisition with cash on its balance sheet. (IFS) and Gaota Semiconductor, Intel's contract manufacturing services division, will operate independently until the deal is completed.

After the news, Gaota Semiconductor U. S. stocks rose more than 50% before trading. As of press time, they rose more than 40% before trading to 46.85 US dollars per share. Intel edged up 1.24% before trading.

Intel takes a fancy to the chip foundry capability of the tower.

According to the data, High Tower Semiconductor is headquartered in Migdale Emmek, Israel, and is good at mature process chip manufacturing and special process foundry business. the main products include analog, sensor, MEMS, mixed signal, RFCMOS and PMIC, etc. Although its technology is not the latest and most advanced, but under normal circumstances, the business is very stable, the life cycle of products is long, and products are widely used in automotive, consumer products, medical and industrial equipment and other fields.

More importantly, Gaota Semiconductor is the wafer foundry of the global Top10. According to statistics from Jibang Consulting, a research firm, in the third quarter of 2021, Gaota Semiconductor ranked ninth among global foundry manufacturers, with a market share of 1.4%. According to the company's website, it has two manufacturing plants (150mm and 200mm) in Israel, two in the United States (200mm) and three in Japan (two 200mm and one 300mm), including the TPSCo, tower, a joint venture with Panasonic, and a 300mm manufacturing plant in Italy shared with Italian semiconductor (ST Microelectronics).

What Intel takes a fancy to is the chip foundry ability of the tower. Intel said the acquisition would give a strong boost to Intel's IDM2.0 strategy and further expand Intel's manufacturing capacity, global layout and technology portfolio to meet unprecedented industry needs. The deal is expected to immediately boost Intel's non-GAAP earnings per share ((EPS)).

It reflects the extreme shortage of semiconductor foundry capacity in the world.

In recent years, Intel has entered a radical expansion mode under the leadership of CEO Pat Kissinger: in March 2021, Pat Kissinger announced the IDM 2.0 strategy and set up Intel OEM Services Division, which plans to compete with TSMC and Samsung. Subsequently, Intel announced that it would invest $20 billion to build a fab in the United States and launched a $1 billion fund to build a foundry innovation ecosystem.

M & An is only one of the important parts of Intel's global foundry strategy, and (Global foundries), the four largest wafer foundry in the world, has once become its "gossip object".

Behind its frenzied expansion is the extreme shortage of global semiconductor foundry capacity. Pat Kissinger has previously said that the company expects chip supplies to remain tight until at least the end of 2023 and that the supply situation will improve in 2025-2030, when Intel and other manufacturers will increase production in their wafer facilities. to meet growing demand and upgrade to technology.

The United States and the European Union have respectively introduced their own chip bills, which plan to invest 52 billion US dollars / 43 billion euros to encourage local semiconductor production. At the same time, TSMC, Texas Instruments, Intel and other global semiconductor leaders have raised capital expenditure guidelines, global semiconductor production capacity is going through a new round of expansion cycle.