Acqui­si­ti­on acce­le­ra­tes Intel’s glo­bal, end-to-end foundry business.

NEWS HIGHLIGHTS

• Tran­sac­tion crea­tes a glo­bal­ly diver­se end-to-end foundry to help meet gro­wing semi­con­duc­tor demand and brings more value to cus­to­mers across the near­ly $100 bil­li­on addressa­ble foundry market. 
• Acqui­si­ti­on acce­le­ra­tes Intel’s path to beco­ming a major pro­vi­der of foundry ser­vices and capa­ci­ty glo­bal­ly, now offe­ring one of the industry’s broa­dest port­fo­li­os of dif­fe­ren­tia­ted technology. 
• High­ly com­ple­men­ta­ry tran­sac­tion brings tog­e­ther Intel’s lea­ding-edge nodes and sca­le manu­fac­tu­ring with Tower Semiconductor’s spe­cial­ty tech­no­lo­gies and cus­to­mer-first approach to deli­ver lea­ding tech­no­lo­gy and manu­fac­tu­ring capa­bi­li­ties and enhan­ced value to cus­to­mers globally.
• Tran­sac­tion is expec­ted to be imme­dia­te­ly accre­ti­ve to Intel’s non-GAAP EPS.
• Intel and Tower Semi­con­duc­tor manage­ment will host a con­fe­rence call for inves­tors, media and indus­try ana­lysts at 5:30 a.m. PST today (3:30 p.m. Isra­el Stan­dard Time) to pro­vi­de fur­ther details on the transaction. 

SANTA CLARA, Calif., and MIGDAL HAEMEK, Isra­el, Feb. 15, 2022 – Intel Cor­po­ra­ti­on (Nasdaq: INTC) and Tower Semi­con­duc­tor (Nasdaq: TSEM), a lea­ding foundry for ana­log semi­con­duc­tor solu­ti­ons, today announ­ced a defi­ni­ti­ve agree­ment under which Intel will acqui­re Tower for $53 per share in cash, repre­sen­ting a total enter­pri­se value of appro­xi­m­ate­ly $5.4 bil­li­on. 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.

“Tower’s spe­cial­ty tech­no­lo­gy port­fo­lio, geo­gra­phic reach, deep cus­to­mer rela­ti­onships and ser­vices-first ope­ra­ti­ons will help sca­le Intel’s foundry ser­vices and advan­ce our goal of beco­ming a major pro­vi­der of foundry capa­ci­ty glo­bal­ly,” said Pat Gel­sin­ger, Intel CEO. “This deal will enable Intel to offer a com­pel­ling breadth of lea­ding-edge nodes and dif­fe­ren­tia­ted spe­cial­ty tech­no­lo­gies on matu­re nodes – unlo­cking new oppor­tu­ni­ties for exis­ting and future cus­to­mers in an era of unpre­ce­den­ted demand for semiconductors.”

As a key part of its IDM 2.0 stra­tegy, Intel estab­lished Intel Foundry Ser­vices (IFS) in March 2021 to help meet the gro­wing glo­bal demand for semi­con­duc­tor manu­fac­tu­ring capa­ci­ty and to beco­me a major pro­vi­der of U.S.- and Euro­pe-based foundry capa­ci­ty to ser­ve cus­to­mers glo­bal­ly. IFS curr­ent­ly offers lea­ding-edge pro­cess and pack­a­ging tech­no­lo­gy, com­mit­ted capa­ci­ty in the U.S. and Euro­pe and other geo­gra­phies in the future, and a broad intellec­tu­al pro­per­ty (IP) portfolio. 

Tower’s exper­ti­se in spe­cial­ty tech­no­lo­gies, such as radio fre­quen­cy (RF), power, sili­con-ger­ma­ni­um (SiGe) and indus­tri­al sen­sors, exten­si­ve IP and elec­tro­nic design auto­ma­ti­on (EDA) part­ner­ships, and estab­lished foundry foot­print will pro­vi­de broad covera­ge to both Intel and Tower’s cus­to­mers glo­bal­ly. Tower ser­ves high-growth mar­kets such as mobi­le, auto­mo­ti­ve and power. Tower ope­ra­tes a geo­gra­phi­cal­ly com­ple­men­ta­ry foundry pre­sence with faci­li­ties in the U.S. and Asia ser­ving fab­less com­pa­nies as well as IDMs and offers more than 2 mil­li­on wafer starts per year of capa­ci­ty – inclu­ding growth oppor­tu­ni­ties in Texas, Isra­el, Ita­ly and Japan. Tower also brings a foundry-first cus­to­mer approach with an indus­try-lea­ding cus­to­mer sup­port por­tal and IP store­front, as well as design ser­vices and capabilities. 

“With a rich histo­ry, Tower has built an incre­di­ble ran­ge of spe­cial­ty ana­log foundry solu­ti­ons based upon deep cus­to­mer part­ner­ships, with world­wi­de manu­fac­tu­ring capa­bi­li­ties. I could not be prou­der of the com­pa­ny and of our talen­ted and dedi­ca­ted employees,” said Rus­sell Ell­wan­ger, Tower CEO. “Tog­e­ther with Intel, we will dri­ve new and meaningful growth oppor­tu­ni­ties and offer even grea­ter value to our cus­to­mers through a full suite of tech­no­lo­gy solu­ti­ons and nodes and a great­ly expan­ded glo­bal manu­fac­tu­ring foot­print. We look for­ward to being an inte­gral part of Intel’s foundry offering.” 

Dr. Rand­hir Tha­kur, pre­si­dent of Intel Foundry Ser­vices, said: “We are thril­led to wel­co­me the Tower team to Intel. Their deca­des of foundry expe­ri­ence, deep cus­to­mer rela­ti­onships and tech­no­lo­gy offe­rings will acce­le­ra­te the growth of Intel Foundry Ser­vices. We are buil­ding Intel Foundry Ser­vices to be a cus­to­mer-first tech­no­lo­gy inno­va­tor with the broa­dest ran­ge of IP, ser­vices and capa­ci­ty. Tower and IFS tog­e­ther will pro­vi­de a broad port­fo­lio of foundry solu­ti­ons at glo­bal sca­le to enable our cus­to­mers’ ambitions.”

Intel is the only lea­ding-edge play­er with both rese­arch and deve­lo­p­ment and manu­fac­tu­ring in the U.S., inclu­ding recent­ly announ­ced capa­ci­ty expan­si­ons in Ari­zo­na and New Mexi­co, as well as plans to build a new mega-site in Ohio. Tower’s tech­no­lo­gy and manu­fac­tu­ring foot­print is high­ly com­ple­men­ta­ry to Intel’s IFS capa­bi­li­ties in lea­ding-edge pro­ces­ses, allo­wing the com­bi­ned com­pa­ny to pro­vi­de broa­der offe­rings to cus­to­mers at sca­le. With the addi­ti­on of Tower, Intel is stron­gly posi­tio­ned to bring more value to cus­to­mers across the near­ly $100 bil­li­on addressa­ble foundry market.

Tran­sac­tion Details and Timing

The tran­sac­tion is expec­ted to be imme­dia­te­ly accre­ti­ve to Intel’s non-GAAP EPS. Intel intends to fund the acqui­si­ti­on with cash from the balan­ce sheet.

The tran­sac­tion is expec­ted to clo­se in appro­xi­m­ate­ly 12 months. It has been unani­mously appro­ved by Intel’s and Tower’s boards of direc­tors and is sub­ject to cer­tain regu­la­to­ry appr­ovals and cus­to­ma­ry clo­sing con­di­ti­ons, inclu­ding the appr­oval of Tower’s stockholders.

IFS and Tower Semi­con­duc­tor will run inde­pendent­ly until deal clo­sure; IFS will con­ti­nue to be led by Tha­kur, and Tower will con­ti­nue to be led by Ell­wan­ger during this time. Upon the clo­se of the tran­sac­tion, Intel’s intent is for the two orga­niza­ti­ons to beco­me a ful­ly inte­gra­ted foundry busi­ness. The com­pa­ny will share more details on inte­gra­ti­on plans at that time. 

Gold­man Sachs & Co. LLC ser­ved as finan­cial advi­sor to Intel; and Skad­den, Arps, Sla­te, Meag­her & Flom LLP and Yigal Arnon & Co. ser­ved as legal advi­sors. J.P. Mor­gan Secu­ri­ties LLC ser­ved as finan­cial advi­sor to Tower; and Lat­ham & Wat­kins, LLP and FISCHER (FBC & Co.) ser­ved as legal advisors.

Tran­sac­tion Dis­cus­sion Audiocast

Intel and Tower manage­ment will host a con­fe­rence call for inves­tors, media and indus­try ana­lysts at 5:30 a.m. PST (3:30 p.m. IST) today to dis­cuss the tran­sac­tion and Intel’s foundry stra­tegy. Plea­se visit http://www.directeventreg.com/registration/event/4070988 to regis­ter for the con­fe­rence call. The con­fe­rence call can also be acces­sed in the United Sta­tes at 1–888-869‑1189 and out­side the United Sta­tes at 1–706-643‑5902. A replay will be available on Intel’s Inves­tor Rela­ti­ons web­site, INTC.com.  

Tower Semi­con­duc­tor Fourth Quar­ter and Fis­cal Year 2021 Ear­nings Release Update

Tower will issue its fourth-quar­ter and fis­cal year 2021 finan­cials on Feb. 17, 2022. In light of the announ­ced tran­sac­tion, Tower will not pro­vi­de gui­dance for the first-quar­ter 2022 and will not host an ear­nings con­fe­rence call.

About Tower Semiconductor
Tower Semi­con­duc­tor Ltd. (Nasdaq: TSEM, TASE: TSEM), the lea­ding foundry of high-value ana­log semi­con­duc­tor solu­ti­ons, pro­vi­des tech­no­lo­gy and manu­fac­tu­ring plat­forms for inte­gra­ted cir­cuits (ICs) in gro­wing mar­kets such as con­su­mer, indus­tri­al, auto­mo­ti­ve, mobi­le, infra­struc­tu­re, medi­cal, and aero­space and defen­se. Tower Semi­con­duc­tor focu­ses on crea­ting posi­ti­ve and sus­tainable impact on the world through long-term part­ner­ships and its advan­ced and inno­va­ti­ve ana­log tech­no­lo­gy offe­ring, com­pri­sed of a broad ran­ge of cus­to­mizable pro­cess plat­forms such as SiGe, BiC­MOS, mixed-signal/C­MOS, RF CMOS, CMOS image sen­sor, non-ima­ging sen­sors, inte­gra­ted power manage­ment (BCD and 700V), and MEMS. Tower Semi­con­duc­tor also pro­vi­des world-class design ena­blem­ent for a quick and accu­ra­te design cycle as well as pro­cess trans­fer ser­vices inclu­ding deve­lo­p­ment, trans­fer, and opti­miza­ti­on, to IDMs and fab­less com­pa­nies. To pro­vi­de mul­ti-fab sourcing and exten­ded capa­ci­ty for its cus­to­mers, Tower Semi­con­duc­tor owns two manu­fac­tu­ring faci­li­ties in Isra­el (150mm and 200mm), two in the U.S. (200mm), three faci­li­ties in Japan (two 200mm and one 300mm) which it owns through its 51% hol­dings in TPS­Co and is sha­ring a 300mm manu­fac­tu­ring faci­li­ty being estab­lished in Ita­ly with ST Microelec­tro­nics. For infor­ma­ti­on, plea­se visit: www.towersemi.com.

 

Forward-Looking Statements

This document contains certain forward-looking statements within the meaning of the “safe harbor” provisions of the United States Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, related to the proposed transaction between Intel and Tower Semiconductor, including statements regarding the benefits and the timing of the transaction as well as statements regarding the companies’ products and markets. Words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “forecast,” “intend,” “likely,” “may,” “plan,” “potential,” “project,” “predict,” “seek,” “should,” “target,” “would” and “will” and variations of such words and similar expressions are intended to identify such forward-looking statements. Such statements are based on management’s expectations as of the date they were first made and involve risks and uncertainties that could cause our actual results to differ materially from those expressed or implied in our forward-looking statements. Such risks and uncertainties include, among others, the risk that the transaction may not be completed in a timely manner or at all, which may adversely affect the companies’ businesses and the price of their securities; uncertainties as to the timing of the consummation of the transaction and the potential failure to satisfy the conditions to the consummation of the transaction, including the receipt of certain governmental and regulatory approvals; the potential for regulatory authorities to require divestitures, behavioral remedies or other concessions in order to obtain their approval of the proposed transaction; the occurrence of any event, change or other circumstance that could give rise to the termination of the merger agreement; the effect of the announcement or pendency of the transaction on Intel’s business relationships, operating results, and business generally; delays, disruptions or increased costs in the integration of Tower Semiconductor’s technology into existing or new products; the potential that Tower Semiconductor shareholders may not approve the transaction; expected benefits, including financial benefits, of the transaction may not be realized; integration of the acquisition post-closing may not occur as anticipated, and the combined companies’ ability to achieve the growth prospects and synergies expected from the transaction, as well as delays, challenges and expenses associated with integrating the combined companies’ existing businesses may incur; litigation related to the transaction or otherwise; unanticipated restructuring costs may be incurred or undisclosed liabilities assumed; attempts to retain key personnel and customers may not succeed; risks related to diverting management’s attention from Intel’s ongoing business operations; exposure to inflation, currency rate and interest rate fluctuations and risks associated with doing business locally and internationally, as well as fluctuations in the market price of Intel and Tower Semiconductor’s traded securities; the impact of the COVID-19 pandemic on Intel and Tower Semiconductor’s business and general economic conditions; demands in Tower Semiconductor’s customer end markets and for Tower Semiconductor’s foundry services and/or products that exceed Tower Semiconductor’s capacity; ongoing or potential litigations or disputes, incidental to the conduct of Tower Semiconductor’s ongoing business, with customers, suppliers, landlords, or other third parties; the business combination or the combined company’s products may not be supported by third parties; actions by competitors may negatively impact results; potential adverse reactions or changes to business relationships resulting from the announcement or completion of the transaction; potential negative changes in general economic conditions in the regions or the industries in which Intel and Tower Semiconductor operate; potential failure to meet the conditions set in the approval certificates received from the Israeli Investment Center under which Tower Semiconductor received a significant amount of grants in past years; exposure to inflation, currency rates (mainly the Israeli Shekel and Japanese Yen); and other risks detailed in Intel’s and Tower Semiconductor’s filings with the Securities and Exchange Commission (the “SEC”) including those discussed in Intel’s most recent Annual Report on Form 10‑K and in any subsequent periodic reports on Form 10‑Q and Form 8‑K and Tower Semiconductor’s most recent Annual Report on Form 20‑F and in any subsequent reports on Form 6‑K, each of which is on file with or furnished to the SEC and available at the SEC’s website at www.sec.gov. SEC filings for Intel are also available on Intel’s Investor Relations website at www.intc.com, and SEC filings for Tower Semiconductor are available in the Investor Relations section of Tower Semiconductor’s website at ir.towersemi.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of their dates. Unless otherwise required by applicable law, Intel and Tower Semiconductor undertake no obligation and do not intend to update these forward-looking statements, whether as a result of new information, future events or otherwise.

Additional Information and Where to Find It

This communication is being made in respect of the proposed transaction. Tower Semiconductor intends to furnish to the SEC and mail or otherwise provide to its shareholders a proxy statement in connection with the proposed transaction with Intel (the “proxy statement”), and each party will file or furnish other documents regarding the proposed transaction with the SEC. The proxy statement will be sent or given to the shareholders of Tower Semiconductor and will contain important information about the proposed transaction and related matters. This communication is not a substitute for the proxy statement or any other document that may be filed or furnished by Tower Semiconductor with the SEC. Investors and security holders are urged to read the proxy statement in its entirety and other relevant documents filed with or furnished to the SEC in connection with the proposed transaction or incorporated by reference therein when they become available before making any voting or investment decision with respect to the proposed transaction because they will contain important information about the proposed transaction and the parties to the proposed transaction.

You may obtain copies of all documents filed with or furnished to the SEC regarding this transaction, free of charge, at the SEC’s website (www.sec.gov). In addition, investors and shareholders will be able to obtain free copies of the proxy statement and other documents filed with or furnished to the SEC by Intel on Intel’s Investor Relations website (www.intc.com) or by writing to Intel, Investor Relations, 2200 Mission College Blvd., Santa Clara, CA 95054 (for documents filed with the SEC by Intel), or by Tower Semiconductor on Tower Semiconductor’s Investor Relations website (ir.towersemi.com) or by writing to Tower Semiconductor, Corporate Secretary, 20 Shaul Amor Street, Ramat Gavriel Industrial Park, P.O. Box 619, Migdal Haemek 2310502, Israel (for documents filed with or furnished to the SEC by Tower Semiconductor).