Intel scrapping this 5.4 billion dollar deal with Tower Semi today

after failing to get some regulatory approvals in time.

Christina Parts of Nevlos here at Post 9 today talk about the deal and what it means for the foundry business

well it was a long 18 months Intel waiting patiently and now mutually

in quotations mutually agreeing with Israeli foundry tower

semiconductor to terminate its plans to acquire tower but this

failed deal is just really about China's regulatory body refusing to play ball

amid rising tensions with the United States.

So Intel derives roughly a quarter or a little bit over a quarter of its revenues from China.

In other words, a strong presence in the country means regulators have the right to review any mergers of

companies that earn a certain amount of revenue in China so that's the reason why

they they were able to slow down this deal and that's why you're seeing tower

semi-shares on your screen down about 8.5 percent.

Intel, a little bit more of a less negative reaction down about 2 percent.

But overall, China is not happy with the American-led set of international restrictions on the sale of

advanced computer chips.

This failed acquisition is a way for China to fight back.

They did so with Micron, blocking Micron chips, and it does set a precedence for any other American firms

that derive revenues from China and are looking at any other type of M&A activity

but this also disappoints prospects for Intel's Foundry business. Tower Semi is small, you

know less than $2 billion in revenue and really roughly covers about 1% of Foundry

revenues you can see on your screen and when you put into contacts with Taiwan

...