A $5.4 billion international acquisition of an Israeli chip manufacturer by Intel was cut off after China did not sign off on the deal, probably because of rising tensions with the United States, reports the Associated Press.
The decision was made by both Intel and Tower Semiconductor. Intel said that the deal was cut off “due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement.”
For the deal to occur, it needed approval from regulators worldwide, including in China. The Chinese regulators did not approve the merger agreement by a deadline on Wednesday.
Recently, the U.S. tightened export controls and blocked U.S. investment into Chinese high-tech companies, this is part of a plan to reduce China’s ability to purchase and manufacture advanced chips. Those sanctions have increased tensions between China and the U.S.
Intel’s intention was to close the deal by the first quarter of the year but then extended the deadline because it failed to receive approval from China.
The acquisition would have helped the firm to expand its manufacturing capacities and have more opportunities in Israel, Italy, and Japan.
In compensation, Intel Corp will pay Tower Semiconductor a termination fee of $353 million.