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Intel and Israeli chip maker Tower Semiconductors are still set to work closely together, despite the cancelled acquisition that would have been worth more than 5 billion euros. Tower is investing 280 million euros ($300 million) in Intel Foundry Services’ plant in New Mexico to produce 65nm processors.

Several weeks ago, Intel’s planned acquisition of Tower Semiconductor met with objections from the Chinese regulators. This possibly represented a response to U.S. restrictions on the export of processors and chip manufacturing equipment. As a result, the acquisition was called off.

New way of intensive cooperation

The two sides have now found a new way of working intensively together after all. The cooperation amounts to Intel providing so-called foundry (manufacturing) services for Tower from its New Mexico plant.

Tower is investing $300 million to purchase its own chip manufacturing equipment and other fixed “assets” to be housed at the respective Intel plant.

Production lines

At its foundry plant, Intel will produce about 600,000 photo layers per month for Tower. This is for the expected demand for 300mm analog processing.

In the process, the chip giant will also set up 65 nanometer power management BCD (bipolar-CMOS-DMOS) production lines, among other production lines.

With the deal, Tower significantly expands its global production capacity. The move comes in addition to the production of processors that will soon occur in New Mexico, the chip maker also has plants in Israel, Japan, and soon in Italy in cooperation with STMicroelectronics.

Also read: Intel reveals architecture for Xeon chips slated for 2024