By Dana Cimilluca and Cara Lombardo
$Intel(INTC.US)$ is close to a deal to buy Israeli chip company $Tower Semiconductor(TSEM.US)$ for nearly $6 billion, according to people familiar with the matter, in its latest move to bolster a plan to make more chips for other companies.
A deal could be unveiled as soon as this week, assuming the talks don't fall apart, the people said. The deal would likely include a hefty premium, given Tower's market value of roughly $3.6 billion. Indeed, the shares soared more than 50% in after-hours trading after The Wall Street Journal reported on the expected takeover.
Tower, whose shares trade in the U.S. on the Nasdaq stock market, makes semiconductors and circuits used in everything from cars and consumer products to medical and industrial equipment. It operates manufacturing facilities in Israel, California, Texas and Japan, according to its website. The company is based in Migdal HaEmek, in northern Israel near Nazareth.
Tower is similar to GlobalFoundries Inc., a much larger manufacturer that Intel explored a deal for over the summer. GlobalFoundries and its owner, Mubadala Investment Co., an investment arm of the Abu Dhabi government, ultimately decided to pursue an IPO instead, and the company now trades publicly with a market value of around $30 billion.
Intel in January said it plans to invest at least $20 billion in a new chip-making capacity in Ohio, bolstering the company's semiconductor-production ambitions as greater demand for digital products and a global chip shortage have amplified the need for more manufacturing.
The company, with a market value of nearly $200 billion, has made more than $100 billion in investment pledges over the past year. Intel Chief Executive Pat Gelsinger said the Ohio site could eventually grow to accommodate eight chip factories, also known as FABs, with spending potentially reaching around $100 billion over the next decade.
Intel has been busy on the strategic front lately. The company is planning to publicly list shares in its Mobileye unit in a deal that could value the self-driving-car unit at north of $50 billion.
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