Intel Buys Tower Semiconductor for $5.4B, Enters Image Sensor Business

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Intel Buys Tower Semiconductor

Intel has announced that it will purchase camera sensor manufacturer Tower Semiconductor (formerly TowerJazz as of March, 2020) in a deal worth $5.4 billion.

Intel’s Aggressive Foundry Expansion

Intel will acquire Tower for $53 per share in cash, which comes to a total value of about $5.4 billion. The acquisition significantly advances its strategy as the company further expands its manufacturing capacity, global footprint, and technology portfolio.

Intel has been aggressively expanding its manufacturing capabilities as the demand for semiconductors continues to rise. The purchase falls under Intel’s Foundry Services (IFS) plan that it launched in 2021, where it would establish IFS as a fully vertical, standalone foundry business.

Tower Semiconductor was selected for its specialty in technology manufacturing, radio frequency (RF), power, silicon-germanium (SiGe) and industrial sensors, extensive IP and electronic design automation (EDA) partnerships, and of course its established foundry footprint. In the official press release of the transaction, Intel doesn’t mention Tower Semiconductor’s history in image sensors for commercial camera products and it’s unclear if Intel will continue to leverage Tower in that manufacturing capacity.

Tower’s Image Sensor Business

Tower Semiconductor is one of the few major image sensor manufacturers outside of Sony, Canon, and Samsung. That said, it was never clear how big of a foothold Tower held in consumer cameras given that third-party manufacturing is heavily downplayed by camera makers and rarely, if ever, disclosed.

In 2019, Tower said that it believed Sony’s sensor dominance was a problem for camera manufacturers.

“The problem is that Sony is also a camera maker, so they also compete with their customers,” Dr. Avi Strum, the then SVP and GM of Tower’s Sensors business said. “It’s not an easy situation, especially if the market grows and there is not enough capacity so there is a competition on supply. If Sony is also a customer of their own facilities, of their own production, they may give themselves the benefit of getting it first.”

For a time, Panasonic owned a major stake in the company but sold it in December of 2019. Over the years, Tower has been regularly linked to the sensors in Nikon cameras. In 2020, the sensors in the Z50 and D7500 were rumored to have been produced at least in part at Tower thanks to the two cameras appearing in an investor and analysts online conference presentation document.

With Intel now in control of Tower’s manufacturing and with how little consumer sensors were mentioned in the reasons for the acquisition, it’s unclear if Tower will continue to try and challenge Sony in the consumer sensor space. Intel was briefly in the camera business with its depth-sensing and facial recognition RealSense system, but it announced that it was dropping the development of the platform in August of 2021 to focus on its core chip business. The purchase of Tower seems in contrast to this strategy if Intel intends to continue to produce image sensors.

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