Power Semiconductors

How Intel's acquisition of Tower bolsters its auto chips strategy

16 February 2022
Intel buying Tower Semiconductor gives the company mature process nodes to fit into Intel’s plan to move more into automotive semiconductor manufacturing. Source: Intel

Intel wants to get more heavily involved in the manufacturing of automotive semiconductors. But the automotive sector isn’t necessarily ready for the advanced process technologies Intel has.

So, Intel went out and acquired some of these mature processing nodes with the buyout of Israeli pure-play foundry Tower Semiconductor for $5.4 billion.

The deal advances Intel’s strategy to expand its manufacturing capacity, global footprint and technology portfolio. Tower’s two manufacturing facilities in Israel (150 mm and 200 mm), two 200 mm facilities in the U.S., three facilities in Japan (two 200 mm and one 300 mm) and a share of a 300 mm facility in Italy with ST Microelectronics will expand Intel’s manufacturing capabilities.

Gaining lower nodes

Acquiring Tower gives Intel a broader portfolio for manufacturing at lower processing nodes but also ups potential capacity for auto chip makers in the future. The automotive market is currently getting hammered by the ongoing chip shortage in the supply chain, causing many automotive OEMs to revise production plans and revenues.

According to Phil Amsrud, senior principal analyst for automotive semiconductors at IHS Markit, the Tower acquisition gives Intel some needed attention on mature process nodes.

“One of the things we learned in 2021 is that leading-edge technology is cool and sexy but there is a lot of mature technology out there and it is not going to shrink down to advanced process nodes anytime soon,” Amsrud said.

Intel wants to move more into the automotive chip sector but historically many automotive chips are not at a level where state-of-the-art manufacturing is needed.

“Intel doesn’t have a lot of capacity at these lower nodes, which made it interesting that they wanted to get more involved in manufacturing automotive chips,” Amsrud said. “But Tower does and from an automotive perspective this gives more options for Intel to provide to automotive chipmakers.”

The deal gives Intel the potential to offer automotive customers two options: use advanced processing nodes from its state-of-the-art fabs or use legacy nodes from Tower, he said.

Foundry expansion

Intel announced it would begin providing foundry services for both U.S. and European companies to help build momentum for U.S. domestic semiconductor manufacturing.

Intel Foundry Services (IFS) was created in March of last year as part of Intel’s announcement that it would invest $20 billion to build two new fabs at its Ocotillo campus in Chandler, Arizona. Later in 2021, Intel said it already signed up Amazon and Qualcomm to IFS and would expand IFS even further by investing another $20 billion in the construction of two leading-edge chip factories in Licking County, Ohio.

Tower, as a pure-play foundry, will help Intel grow its foundry services by offering not just leading-edge nodes but differentiate specialty technologies on mature nodes. Tower currently manufactures radio frequency, power, silicon-germanium (SiGe) and industrial sensors and has intellectual property and electronic design automation (EDA) partnerships with leading vendors.

To contact the author of this article, email PBrown@globalspec.com

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