Intel Is Set To Complete Tower Semiconductor Deal For $5.4 Billion

Following on from the news of Advanced Micron Device's acquisition of Xilinx, rival Intel (NASDAQ: INTC) is closing in on a deal of its own. A conference call has been scheduled between Intel and Tower Semiconductor (NASDAQ: TSEM) this afternoon to discuss, and potentially finalize the opportunity. 

How much Intel is paying to buy Tower

Intel will be buying out Tower in a deal worth $5.4 billion. This is a 50% premium to the previous $3.6 billion valuation commanded by the foundry but the company has seen significant growth with a positive outlook ahead, so it might not be the worst news in the world for Intel.

You can visit Intel's investor relations page later today to listen in for updates, or a recording will be made available to replay following the meeting.

What does Tower Semiconductor do?

Innovative analog and manufacturing solutions -- I know, it's a bit of a mouthful -- but basically, it creates chips that power systems for audio, voice communication, and automated technologies. The business is creating solutions for companies in some exciting sectors, including industrials, automotive, mobile, medical, and aerospace. 

Tower Semiconductor's financials

In Tower's most recent quarter, total revenue grew 25% year-over-year (YoY) to $387 million and net profit increased 157% to $39 million. The company generated record cash from operations in Q4, bringing the total cash and cash equivalents to $212 million.

Is this acquisition good for Intel investors?

This deal will secure Intel a larger position in the medical and industrial equipment sector and gain access to new territories via Tower's operations in Israel, Japan, Texas, and California. 

Overall, this looks like a good move under Intel CEO Pat Gelsinger's leadership, showing continued strength in its mergers and acquisitions department that are adding immediate value to its business operations. This is just the latest of Intel's acquisition spree, and the company has made it apparent that this will be a continuous trend -- it even started a $1 billion founders fund to acquire and support the growth of early start-ups in the foundry space.

A further $20 billion is being invested in Intel's chip-making facilities in Ohio, and this comes during a global chip shortage with a high degree of uncertainty as to when supply constraints will wain. As it takes advantage of industry shortcomings, Intel shows promising potential in a very competitive semiconductor market.