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Intel Foundry Services Links with Tower Semiconductor for Mutual Growth

Intel Foundry Services Links with Tower Semiconductor for Mutual Growth

The News: Intel Foundry Services (IFS) today announced a mutually beneficial partnership with Tower Semiconductor. The agreement has Intel providing foundry services and 300mm manufacturing capability to grow Tower’s global reach. In exchange, Tower will invest up to $300 million in equipment and other assets at Intel’s Rio Rancho, New Mexico facility. The move will add a new capacity corridor of more than 600,000 photo layers per month. Read the full Press Release from Intel.

Intel Foundry Services Links with Tower Semiconductor for Mutual Growth

Analyst Take: In real estate, it’s all about location. In technology, it’s all about partnership. Today’s announcement from IFS proves just that, as two more powerful companies join together to enhance their leadership positions in the industry and keep up with global demand. The announcement highlights a commitment from both Intel and Tower to expand their respective foundry footprints, including through strategic partnerships. Intel will manufacture Tower’s 65-nanometer power management BCD (bipolar-CMOS-DMOS) flows, among other flows at Intel’s Fab 11X in Rio Rancho, New Mexico.

While most people are familiar with Intel, Tower–headquartered in Israel–is not necessarily a household name. Tower Semiconductor is a foundry of high-value analog semiconductor solutions. It provides tech and manufacturing platforms for integrated circuits in nearly all markets serving industrial, mobile, consumer, automotive, medical applications and more.

For Intel, Tower Semiconductor represents an opportunity to partner with external capital to grow its Southwest facilities. Intel had previously announced it would be investing $3.5 billion in New Mexico for manufacturing of advanced semiconductor packaging. This partnership means Intel can lean on Tower to help fuel additional growth at the facility, which will increase its own ability to meet global demand. This agreement also showcases IFS as network of manufacturing capacity across Intel’s global factory network, including in the U.S., Europe, Israel and Asia.

Stuart Pann, Intel senior vice president and general manager of Intel Foundry Services, explains the strategy and how the announcement fits within it: “We launched Intel Foundry Services with a long-term view of delivering the world’s first open system foundry that brings together a secure, sustainable, and resilient supply chain with the best of Intel and our ecosystem. We’re thrilled that Tower sees the unique value we provide and chose us to open their 300mm U.S. capacity corridor.”

Tower, for its part, will be better positioned to continue expanding and scaling globally by using Intel’s existing U.S. foundry infrastructure, especially as looks to serve an expanding customer base in 300mm technologies through its 65nm BCD power and RF SOI technologies (power management and radio frequency silicon on insulator). Tower’s 65nm BCD technology delivers improvements in power efficiency while its 65nm RF SOI technology helps its customers simultaneously reduce handset battery consumption and improve wireless connections. Through its partnership with Intel, Tower will be able to not only scale its existing technologies but also stimulate new ecosystem partnerships to help accelerate its technology roadmap. Tower CEO Russell Ellwanger expects full process flow qualification in 2024, and the announcement as a first step towards more synergistic projects involving Intel.

In tech terms, this partnership is what is commonly referred to as a win-win.

According to Intel, IFS is a huge pillar in its future-facing strategy as the company hopes to position itself once again as an industry leader focused on long term growth. The company says it has already seen 300 percent revenue growth year-over-year in Q2 2023, and its recent agreement with Synopsys to develop a portfolio of intellectual property on Intel 3 and Intel 18A process nodes adds to this momentum.

Additional Industry implications: Capacity has been an issue for the chip and semiconductor market since the coronavirus pandemic. Though the shortage has somewhat reversed itself this past year, many believe that production capabilities will continue to be an issue moving forward. In that sense too, the partnership between Intel and Tower creates value as it should help alleviate some bottlenecks to global semiconductors access in the coming year. This will be as important as ever, as political friction with China continues to threaten disruptions in the semiconductor market. Without access to the Chinese market, the United States could even face a semiconductor overage–something no one could have predicted a year or two ago. As a footnote, worker shortages within the industry could also make it difficult to stay on track with production, potentially causing gaps and asymmetries in the supply chain, but partnerships like the one announced by Intel and Tower could be a way to create backstop against those types of disruptions.

Though none of us knows what lies in store for the semiconductor marketplace, it’s clear that the partnership between Intel and Tower represents an encouraging trend in technology: growing smarter by partnering together to limit risk and scale more quickly. It’s something I expect to see continue among other tech leaders as we round out 2023 and beyond.

Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.

Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.

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Image Credit: Business Wire

Author Information

Daniel is the CEO of The Futurum Group. Living his life at the intersection of people and technology, Daniel works with the world’s largest technology brands exploring Digital Transformation and how it is influencing the enterprise.

From the leading edge of AI to global technology policy, Daniel makes the connections between business, people and tech that are required for companies to benefit most from their technology investments. Daniel is a top 5 globally ranked industry analyst and his ideas are regularly cited or shared in television appearances by CNBC, Bloomberg, Wall Street Journal and hundreds of other sites around the world.

A 7x Best-Selling Author including his most recent book “Human/Machine.” Daniel is also a Forbes and MarketWatch (Dow Jones) contributor.

An MBA and Former Graduate Adjunct Faculty, Daniel is an Austin Texas transplant after 40 years in Chicago. His speaking takes him around the world each year as he shares his vision of the role technology will play in our future.

Olivier Blanchard has extensive experience managing product innovation, technology adoption, digital integration, and change management for industry leaders in the B2B, B2C, B2G sectors, and the IT channel. His passion is helping decision-makers and their organizations understand the many risks and opportunities of technology-driven disruption, and leverage innovation to build stronger, better, more competitive companies.  Read Full Bio.

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