If you’re a multi-billion dollar semiconductor giant and you don’t get your way, then… try try again. 😅
That’s what Intel, that company that has bounced out of two rumored M&A negotiations in recent months, is doing. Today, Intel managed to actually buy something — Tower Semiconductor, to be specific, in a $5.4 billion deal. 💰 💰
Intel will pay $53 per share for the Israeli chipmaker in a bid to bolster its “manufacturing capacity and technology portfolio amid rising demand.” Tower makes semiconductor products used in vehicles, consumer products, industrial equipment, and medical equipment, and the company has facilities in Israel, California, Texas, and Japan.
That footprint is attractive for Intel, which has fallen on hard times during the pandemic. Intel has been sad for the greater part of the “chip shortage,” moving to the downside while market leaders like $TSM and $NVDA capture the upside. 🤷
The American chipmaker was once the market leader in the U.S. for CPU chips (namely, x86 chips), but its former power has been challenged by the once-again rising star $AMD, 🌟 which Intel attempted to kill more than a decade ago by engaging in unfair competition with manufacturers.
The suit cost Intel over a billion dollars and prompted a years-long legal battle, famously ending with a trip to the Supreme Court. To make matters worse, Intel is falling on even harder times because of $AAPL‘s decision to preference its own in-house chipset. These two factors are doing to Intel what the Millennials did to the McDonald’s Premium McWrap (spoiler: killed it.) 🔪
Jokes aside, Intel is fine, but the company has definitely seen better days. $INTC is down 22.5% in the last year, analysts are overwhelmingly neutral about it, the company’s YoY growth fell 4% in 2021, Intel expects little growth in 2022, and its P/E is priced for more downside.
All of that said, the company has been investing in expanding its capacity and product options in hopes of bringing those revenues a much-needed shot in the arm. Last month, Intel unveiled plans for a new $20 billion chip factory outside Columbus, OH. Just last week, the company announced a blockchain-centric compute chip.