Intel buys Israeli chipmaker for $5.4B as US manufacturers go on a spending spree to compete with China

Cashing in all the chips… As demand for semiconductor chips used in everything from Teslas to PlayStations has boomed amid pandemic shortages, sales and profits rose for chipmakers like AMD, Nvidia, and Intel despite those supply bottlenecks. This week Intel said it’s buying Israeli chip maker Tower for $5.4B in cash to expand its specialized chip-making capacity.

• Intel is the world’s biggest semiconductor company by sales, but it outsources much of its actual manufacturing to Taiwan-based TSMC, which makes more than half of global chips.
• This Tower deal is a small part of Intel’s push to increase its manufacturing muscle at home and abroad.

The American Chip-aissance… The Great Chip Shortage exposed how much US companies rely on foreign chip makers and pushed Intel into a spending spree to better compete with Asian manufacturers. Intel’s spending $20B on two plants in Arizona and possibly up to $100B on a new factory in Ohio that could become the world’s largest. Intel’s money moves are among several of its recent investments in US manufacturing:

• Automakers from GM to Lucid plan to spend $24B building EV and battery factories in the US. Since 2021 companies have announced plans to invest a total of $200B in American plants.
• Manufacturing has accounted for a steady amount of US GDP since the 1940s, but has been declining for decades. The US lost its title as the world’s biggest manufacturer in 2010… to China.