Published on Mar 02, 2023
With Intel’s (INTC) $5.4 billion bid for Tower Semiconductor (TSEM) under review by China’s antitrust authority, Intel China Chairwoman Wang Rui has embarked on a charm offensive, stressing the company’s long-term commitment to the country.
Wang, who’s also a senior vice president at the U.S. computer chipmaker, told the Intel China Strategy Media Communication Conference on Friday that the company is continuing to invest by upgrading its operations in the country and cooperating with local partners so that it is fully integrated into the nation’s economy.
“We will go deeper into the local market with stronger leadership and more integrated local operations so as to create value for [local] customers, industry and society,” she said.
The U.S. semiconductor giant will also cooperate on cloud and computer products that support the development of the China’s digital capabilities and economy, she said.
Wang also told a Chinese media outlet earlier that the acquisition of Tower, a leading foundry of analog chips, could further expand Intel’s manufacturing capacity, global layout, technology portfolio and accelerate Intel’s plans to build the world’s leading foundry services supplier.
She acknowledged in her conference remarks that geopolitics, market headwinds, industry competition, supply chain issues and other internal and external factors are affecting the company’s operations.
The deal appears to be entangled in U.S. export controls, which the Biden administration is tightening over concerns that the Chinese military is using U.S. high-end semiconductors. Local downstream customers are worried that post merger, the U.S. could prohibit Intel from supplying Chinese companies with Israel-based Tower components.
The Intel/Tower Semiconductor deal has been under review for more than six weeks by the State Administration for Market Regulation (SAMR). Sources said Intel/Tower has been engaged with local industry stakeholders since the very stages of the review process and is still working to resolve the concerns expressed by regulators and local industry players.
An Intel spokesperson said the company “continues to work to close the Tower transaction within the first quarter of 2023.” But the deal may instead close in the first half, as indicated in a January 27 security filing, the spokesperson said.
Spokespeople for Tower didn’t respond to requests for comment. SAMR doesn’t comment on ongoing cases.
Clock stopped. Last month SAMR paused its review of the deal after the U.S. semiconductor giant sought additional time to discuss regulatory concerns with the agency’s case handlers, sources said.
It’s not immediately clear how long the clock will remain stopped. This is the first time the agency has used the new stop-the-clock mechanism since it was introduced last year.
SAMR officials have said that the idea was intended to shorten the review timeline. Before the stop-the-clock rule was enacted, many companies involved in complex transactions had to pull and refile their merger filings with the agency and restart the review process from scratch if they couldn’t resolve concerns within 180 days.
But some lawyers are wary of SAMR’s ability to stop the clock and say that it means the review process could become less transparent and more influenced by Chinese industry complaints and the government’s worsening geopolitical relations with the U.S.
China investment. Wang, who was appointed to oversee Intel’s China-based businesses in 2021, said the chip giant has been operating in the country for more than 37 years, and will continue to invest and develop rigorously in the country.
Intel reported $17.1 billion in revenue from its Chinese operations last year. That amount accounts for 27% of the company’s total revenue and makes China Intel’s largest money-making region, according to its financial report.
Intel has over 150 industry partners, spanning operations involved in retail, industrial, transportation, financial, healthcare, energy and education.