Intel (INTC) shares saw a slight increase in pre-market trading as the chipmaker announced its decision to cancel plans to acquire Israel-based Tower Semiconductor. The company cited difficulties in obtaining approval from regulators as the reason for terminating the deal. Intel initially announced the acquisition in February of last year, with the intention of buying the specialty foundry group for $5.4 billion. As part of the termination, Intel will pay a break-up fee of $353 million. The specific approval process that led to the collapse of the deal was not disclosed, but it was reported that Chinese regulators had not yet given their sign-off on the transaction.
Despite the setback, Intel has been focusing on investing in new production facilities in other locations, such as Germany and Poland. This move comes as the company aims to capitalize on European Union subsidies and reduce its reliance on Chinese supply chains. Additionally, Intel recently finalized plans to construct a $25 billion factory in Israel. CEO Pat Gelsinger emphasized the importance of their foundry efforts, which are critical to their long-term strategy. He expressed confidence in their ability to regain leadership in transistor performance and power performance by 2025 while also building momentum with customers and investing in a geographically diverse manufacturing footprint.
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