Thread by @IanCutress

Intel's call on Tower Semi acquisition is starting. #thread $INTC $TSEM @intel

Gelsinger
Thakur
+ CEO Tower on the call

Interesting to see what will be said. Intel Financial day in a couple of days here

Proposed acquisition for $5.4b to take 12 months. Part of IDM 2.0 strategy

Accelerate Intel to address semi supply chain shortages. Important milestone for Intel. Restoring Intel leadership in industry. Tower will become part of IFS. Pat is impressed with depth and model of $TSEM. Combining with Intel to scale to become major global foundry

Highly complimentary business. High Perf and scale vs Tower's specialty tech to address broader needs in market.

Global demand will grow due to digitization. Compute, connectivity, infrastructure, AI. $100B TAM and growing. Three segments are most of opportunity - PC, Mobile, Automotive. Intel 70% of market by 2030.

Tower addresses 30% of the market. Together, capitalize the opportunity and address customers. IFS to become world leading, with Tower this accelerates this vision.

Russell from Tower $TSEM now on call

Leading specialty technology and manufacturing capabilities. Major presence in semi industry. Achieve robust profitable growth, lasting customer partnerships. Acquisition is important for stakeholders and customers. Provide highest value solution as validated by all

Trusted partner with sustained impact in analog tech and solutions. Transaction with Intel is in line with vision. Efficiency, quality. Will become stronger, provide a full suite across lots of nodes and manufacturing footprint. Faster to scale than previously possible

Multiple growth opportunities in analog, serving high growth markets in mobile and infrastructure, displays, automotive, and power efficiency solutions. Worldwide manufacturing. Skilled employees, worldwide experts with experience.

Function of both vision and character - Intel and Tower are connected and inspire employees to meet visions and expand it. Impressed by Intel's vision, honored to choose Tower to be part of Intel and expand.

Now Thakur, head of IFS, on the call

Excited about acquisition. Opportunity for Intel. Tower has a business model built on specialty, complement to Intel leading edge offerings. Extends life of process nodes. Combination of leading edge and specialty will position Intel as end-to-end foundry.

Customers were overwhelmingly excited to work with Intel, but constantly asking to add specialty technologies, now will be able to with Tower in the fold.

Provide comprehensive solutions with high perf and analog for mobile and automotive to the market

Mobile SoC with compelling low power perf, enabled with wireless front end and power opportunities. It's a re-imagining of the semiconductor supply chain.

Battery management portfolio of Tower. Helps meet demands of OEMs and development partners. Strong customer centric approach - deep relations partnering for co-developing key technologies. SiGe, sensors, displays.

IFS is cultivating this model. Broad portfolio and EDA partnerships for partnerships is critical to the model. Tower's foundry experience will become more powerful under Intel's leading edge and scale.

Comes on the back of the announcements last week. The $1b innovation fund with Intel Capital. Also IFS Accelerator alliance program with 16 partners. Also Intel joined RISC-V as Premier member

This is still early stage for Intel. Partnership with Tower will help accelerate that scale as a customer-first technology IP and services in the market.

Back to Pat.

Balanced global supply chain, and deliver on strategy. Expand more plans at the Investor Meeting on 17th Feb.

Q&A Time

Q: Tower is a subscale asset, GMs in 20s. How does this help Intel's IFS?

A (Pat): Two words - scale and synergy. With this, tech of Tower in demand but not the scale. We saw synergy. Accelerate the build out with IFS. 30 year history of Tower is a driver. Helps the vision of Intel from March last year,

A (Russell): GMs are in line with scale. Joining with Intel will help Tower scale. Tower's IP and products are value adds, we have deep partnerships with our customers. SiGe PAs, SiPh, Switch LNAs, in high demand for high-end comms, for infrastructure and mobile.

Q: Given synergies and scale, how expect asset growth and margins to trend over time? How to think of margin profile of IFS? Tower is well below peers on gross margin and op margins.

A (Pat) : More info at investor meeting. Great opp with scale to drive that margin profile. Aggregate margin profile with organic IFS and Tower, in line with leading edge foundry suppliers over time as we build out portfolio. Going to take a couple of years. But very comfortable

A (Thakur): This will be accretive on close. As build IDM 2.0 strat, different pieces coming together for differentiation. Tower is unique in market, Intel can position it in market through synergy and capacity.

Q @semiwiki : Military aspect - is that part of the strategy here?

@SemiWiki A (Pat): Overall we expect specialty technologies, as we've outlined with RAMP-C which Intel won the contract to build foundry for military. We believe this is great opp for Intel to step into that space broadly to meet military and defence requirements.

@SemiWiki A (Pat): Enthusiasm in DC. A (Thakur): More on invester meeting. DoD is already a customer. RAMP-C phase 1 is $250m. Driving 30 test chips from that program. The specialty side, on mature nodes, will compliment nicely.

@SemiWiki Q: Regulatory challenges - discuss what exposure to China as % of revenue?

@SemiWiki A (Pat): It's a year to closure, so time to go through approvals. Given the complimentary nature of Tower assets and Intel assets, expect it to be smooth. But it takes time. That includes approvals in various geogs.

A (Russell): Tower is well represented, trusted customers in china too. See that role continuing. Will do everything need to get approval.

Q: Tower entered partnership with ST Micro last year. What happens?

A (Pat): Excited about relationship with ST Micro. Spoke to their CEO on that topic. Going to lean into that relationship. Excited about Tower's position with ST Micro in Italy. Works with Intel's EU strategy, as well as Israel and Japan.

Q: Benefit in Tower has management team with decades of foundry experience. How does Tower integrate in management

A (Pat): It's a bit early depending on regulatory, we expect to fully merge IFS and Tower into a single foundry business forward. Part of the synergy is to benefit from the decades of experience on how to run a customer centric foundry.

More detail at investor meeting on 17th

That's a wrap. If you enjoyed this content, you know where to find me :)