Recently, Intel confirmed its acquisition of the Israeli company Tower Semiconductor for nearly $6 billion. If the transaction is successfully completed, it will help Intel expand its wafer foundry business.
According to TrendForce, in the fourth quarter of 2021, Tower ranked ninth in the global wafer foundry market, with a total of seven factories located in Israel, the United States, and Japan, contributing to approximately 3% of the global 12-inch wafer capacity. Among these, the 8-inch capacity is more significant, accounting for about 6.2% of the global 8-inch capacity.
In terms of process platforms, Tower can provide a diverse range of special process technologies from 0.8um to 65nm, primarily producing RF-SOI, PMIC, CMOS Sensors, and discrete products, which will assist Intel in expanding its development in the smartphone, industrial, and automotive sectors.
Although Intel has invested in a series of plans to compete with TSMC and Samsung, it has historically focused on manufacturing CPU, GPU, and other processor platform technologies. Moreover, there remains a competitive relationship between Intel and some customers using advanced processes below 10nm, such as AMD and NVIDIA, which have long been entrenched in server, PC CPU, GPU, or other HPC-related chips. Therefore, the likelihood of these companies being attracted to commission Intel for foundry products is low, posing a limitation on Intel’s foundry development.
Thus, to expand the influence of its wafer foundry business, TrendForce believes that Intel’s acquisition of Tower has two considerations.
First, it can help Intel fill the gap in mature process technology and expand its customer base. Tower has long focused on diverse mature process technologies, driven by factors such as upgrades in communication technology and the increasing penetration of new energy vehicles. Among these, the demand for RF-SOI and PMIC is relatively strong, which can compensate for Intel’s relatively singular foundry model and limited customer issues.
Second, under geopolitical considerations, local production and supply distribution are essential. Tower’s factories are distributed across Asia, EMEA, and the Americas, aligning with Intel’s strategy to reduce excessive supply chain concentration in Asia. Additionally, Intel has long-term investments and factory locations in both the United States and Israel, allowing for more flexible capacity scheduling through the acquisition, further avoiding supply chain crises caused by geopolitical risks.
The comprehensive effects of the acquisition, as mentioned above, also bring a significant highlight: Intel will welcome a partnership with Nuvoton Technology. The three factories in Japan were initially established as a subsidiary of Tower and Panasonic in 2014, with a shareholding of 51% and 49%. In 2020, Nuvoton officially acquired Panasonic’s semiconductor business (PSCS), and the three factories then became jointly owned by Tower and Nuvoton, maintaining the same share distribution. After Intel officially acquires Tower, these three factories will be primarily operated by Intel with a 51% stake, collaborating with Nuvoton on industrial and automotive MCU, PMIC, and other product lines, including original Panasonic-related technologies such as CIS, MCU, and MOSFET.
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TrendForce is a global high-tech industry research organization spanning storage, integrated circuits and semiconductors, wafer foundry, optoelectronic displays, LEDs, new energy, smart terminals, 5G and communication networks, automotive electronics, and artificial intelligence. The company has accumulated years of rich experience in industry research, government industrial development planning, project evaluation and feasibility analysis, corporate consulting and strategic planning, and brand marketing, making it a quality partner for government and enterprise clients in high-tech industry analysis, planning evaluation, consulting, and brand promotion.
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