The US chip giant announced plans to buy the Israeli-based chip manufacturer in 2022 andIintel must now pay a termination fee of US$353 million to Tower.
Intel said in a statement that it was terminating its plans “due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement”.
According to several reports, the deal was effectively scuppered by China after antitrust regulators in the country did not rule on the transaction before a deadline set by the two companies.
The merger passed antitrust reviews in both the US and Europe but was delayed in China, which is a key market for Intel.
In 2022, the company employed over 12,000 people in the country and made more than US$17 billion in revenue.
Semiconductor showdown
The move is the latest chapter in the US-China semiconductor showdown. In October of last year, the US government announced a move that affected the Chinese chip industry.
It prohibited US citizens and companies from working with Chinese companies engaged in the production of advanced chips without a special export license.
The goal was likely to prevent China from advancing its chip industry, hindering its development.
This has already been done via Huawei, with the US urging leading companies to move away from China.
Following the imposed sanctions, Huawei was forced to turn to local chip manufacturers in China but they were far behind the likes of Samsung and TSMC.
In spite of increasing tensions, Intel still hoped to gain regulatory approval from the country.
The company’s chief executive Pat Gelsinger visited the country as recently as last month to meet with government officials in an attempt to get a deal over the line.
Despite not completing the deal, Gelsinger said the company will invest in its foundry business, which makes chips for other companies.
In Q2, Intel’s foundry business recorded revenue of US$232 million, up from US$57 million from the year before.
