Intel steps back from Tower agreement, talks head to mediation
The 2023 agreement, under which the U.S. chip giant was to manufacture 300-millimeter wafers for Tower’s customers at its New Mexico facility, was struck only weeks after the collapse of Intel’s planned $5.4-billion acquisition.
Tower Semiconductor has disclosed that Intel intends to withdraw from a 2023 agreement under which the U.S. chip giant was to manufacture 300-millimeter wafers for Tower’s customers at its New Mexico facility, a deal that had been struck only weeks after the collapse of Intel’s planned $5.4-billion acquisition.
In its latest earnings release published on Wednesday, the Israeli chipmaker revealed that “Intel has expressed its intention not to perform under the agreement” signed in September 2023. The two sides are now engaged in mediation, Tower said, adding that production flows initially earmarked for New Mexico are being redirected to the company’s Fab7 plant in Japan, where the processes were originally qualified.
The disclosure marks an abrupt turn for a partnership that was once presented as a strategic bridge between the companies following the failed takeover. The 2023 contract envisioned Tower investing $300 million in equipment for Intel’s Rio Rancho site, securing capacity of more than 600,000 photo layers per month to support next-generation 300-mm chips. At the time, Tower’s CEO Russell Ellwanger described the arrangement as “a first step towards multiple unique synergistic solutions with Intel,” particularly in advanced power management and radio-frequency silicon-on-insulator technologies.
The agreement came less than a month after both companies abandoned their merger plans when the proposed acquisition failed to win regulatory approval in China. Intel paid Tower a $375 million termination fee, but the manufacturing pact was seen as a way to preserve commercial ties and bolster Intel’s ambitions to expand its foundry business.
Tower has thrived since. The company reported fourth-quarter 2025 revenue of $440 million on Wednesday, a 14% increase from the same period a year earlier. Investors have rewarded the momentum: Tower’s shares have surged more than 170% over the past year, lifting its market capitalization to a record above $15 billion.
