Intel Agrees to Buy Tower Semiconductor in $5.4 Billion Deal

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Intel Corp
.
agreed to buy Israeli company

Tower Semiconductor

for $5.4 billion as it looks to expand its manufacturing capacity and technology portfolio amid rising demand.

Intel

will pay $53 per share in cash for Tower, according to a statement on Tuesday.

Tower’s (ticker: TSEM) shares surged 50.62% to $48.07 in premarket trading. Intel (ticker: INTC) rose1.09%

The deal, which has been approved by the companies’ boards, is expected to close in about 12 months. It is expected to be immediately accretive to Intel’s non-GAAP earnings per share. Intel said it intends to fund the acquisition with cash from its balance sheet.

An acquisition of Tower would help Intel make up ground lost in chip making to

Taiwan Semiconductor Manufacturing Co
.
and

Samsung
.

Intel said last month that it planned to invest more than $20 billion to establish two chip factories at a new manufacturing site in Ohio. The site could eventually accommodate up to eight chip factories—also known as fabs—across nearly 1,000 acres.

Tower, based in northern Israel, makes semiconductors and circuits used in everything from cars and consumer products to medical and industrial equipment. The company operates manufacturing facilities in Israel, California, Texas and Japan,

“The acquisition significantly advances Intel’s IDM 2.0 strategy as the company further expands its manufacturing capacity, global footprint and technology portfolio to address unprecedented industry demand,” Intel said in the statement.

Write to Lina Saigol at [email protected]