Tower Semiconductor stock soars 50% as Intel report close to $6 billion deal to buy Israel-based chipmaker

Intel Corp. is close to a $6 billion deal to buy Tower Semiconductor Ltd.

After the markets closed on Monday, the wall street journal reported that Intel INTC,
was using the deal to expand its manufacturing operations, and that the deal could be announced this week if talks do not collapse, according to unnamed sources familiar with the matter.

US-traded shares of Tower TSEM,

climbed 50% after hours, after falling 2% in the regular session to close at $33.13. As of Monday’s close, the company had a market capitalization of $3.54 billion, according to FactSet data.

Read: Semiconductor sales exceed half a trillion dollars for the first time and should continue to grow

The company, which manufactures a wide variety of chips ranging from those for the consumer, industrial, automotive and mobile markets, has manufacturing facilities – called “fabs” in industry parlance – in Migdal Haemek, Israel; Agrate, Italy; Newport Beach, California; and San Antonio, Texas, according to the Tower website.

Tower also holds a 51% interest in TPSCo. with Nuvoton Technology Corp. 4919,
holding a 49% stake. This partnership has three fabs in japan specialized in integrated circuits, of which more than 750 million went to the automotive industry, according to Tower.

Intel pledged to boost manufacturing capacity, allocating up to $28 billion for 2022 in October, and recently said it would spend more than $20 billion to build a ‘mega-site’ factory in Ohio, as well as $20 billion for sites in Arizona. The move to boost capacity has raised concern among analysts as Intel’s spending is hurting the company’s gross margins.

In July, Intel reportedly sought to acquire a then privately owned GlobalFoundries GFS
in a deal estimated to be worth around $30 billion, but that speculation was quashed in October when GlobalFoundries filed an initial public offering and began listing on Nasdaq on October 28.

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