(Bloomberg) — Intel Corp. is close to a deal to acquire Tower Semiconductor Ltd. for about $5 billion as part of its push into the outsourced chip-manufacturing business, according to a person familiar with negotiations.
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The U.S. chipmaker plans to announce the purchase of the Israeli company as early as Tuesday morning, according to the person, who asked not to be identified because the matter is private. The Wall Street Journal previously reported on the deal.
Intel declined to comment on the transaction, while Tower didn’t immediately respond to requests for comment.
The move furthers Chief Executive Officer Pat Gelsinger’s goal of getting into the chip-foundry business — contract manufacturing of semiconductors for other companies. Tower competes in a market dominated by Taiwan Semiconductor Manufacturing Co., but is much smaller. Its sales are about $1.3 billion annually.
Tower’s shares jumped as much as 58% to $52.20 in late trading on the news Monday. Intel fell less than 1%.
The business of providing manufacturing for other companies requires experience in handling different types of chips and designs. Intel has previously had little success in that area because of a lack of commitment to it, Gelsinger has said. Tower makes power management chips, image sensors and a variety of other semiconductors. Its customers include Analog Devices Inc. and Broadcom Inc., according to data compiled by Bloomberg.
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