Computer

Intel pulls muscle: 6,000 million to buy Tower Semiconductor

Since Pat Gelsinger joined Intel things have changed a lot and at a frantic pace. The latest rumor is something a bit unheard of but it has an interesting basis: Intel intends to buy Tower Semiconductor, a company that is itself a foundry like Intel itself and that suggests a very interesting move to compete with TSMC and Samsung.

What drives a chip-making giant to buy a small semiconductor company that doesn’t stand a chance? Well, everything responds to a very elaborate strategic movement that has a series of premises studied by heart.

Intel and Tower Semiconductor: manufacturing, control and positioning

Tower Semiconductor is a foundry that does not compete with any of the big three but at the same time is an industry leader in the solutions that companies need and that are called “high value”. This refers to chips that are not state-of-the-art, but are essential for the manufacture of parts or components that cannot function without them.

For this, they feed on up to 7 facilities spread over three countries and here comes the interesting part. Tower Semiconductor has a FAB of 150mmanother of 200mm (both in Israel, very close to the Intel complex in that country) two more 200mm wafer factories in the United States (California and Texas) and another two of the same size in Japan, in addition to a seventh and last 300mm also in this Asian country.

Therefore, Intel has these FABs very close to its centers, especially that of Israel, and would also strengthen its presence in Asia with those of Japan, competing in delivery times with Samsung and TSMC for that continent. Intel does not intend to build Core processors or ARC GPUs in them, but instead pump and maximize the delivery of associated chips like analog sensors, RFCMOS or PMIC (in real shortage) to have an improved control of the auxiliary industry to the main one.

Increase market share and control production

Tower Semiconductors

If you want to promote one of your technologies or products, controlling the entire supply chain of the parts that you do not manufacture is something much more optimal than depending on smaller companies that at a time like the present cannot respond to your gigantic needs.

The purchase (or alleged purchase, it’s a pretty well unfounded rumor) and rumors say that Intel will put on the table between 5.4 billion and 6 billions to take over Tower Semiconductor with a brilliant strategy. When you buy a company like this, you know that innovation is minimal, the risk is low and the possibilities are high, since what it is about is creating chips in a huge volume over very long periods of time, even during decadeswhere on top of that if you buy them they will work for you based on your needs and as the foundry market is narrow in terms of companies (GlobalFoundries, Vanguard Inc Semiconductor and UMC are out there at the same level) you make sure you partially control your competitors.

Being Tower Semiconductors the sixth manufacturer at an international level with its purchase Intel would strengthen its global dominant position against Samsung and TSMC, it expands its networks to lower sectors and will improve the deliveries and manufacturing times of key components for its products, a move that is more than interesting if it is confirmed.

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