Intel terminated a $5.4 billion deal it announced in February 2022 to acquire Israel-based chip company Tower Semiconductor, blaming an inability to obtain regulatory approvals in a timely manner.

In a statement, the US chipmaking giant revealed it will have to pay Tower Semiconductor a termination fee of $353 million in accordance with terms of the agreement, but it did not disclose which regulatory bodies it had issues with or details about the process.

Before the news broke, Reuters reported there had been challenges with Chinese authorities.

When it announced the deal, Intel targeted approximately 12 months for it to close.

Intel CEO Pat Gelsinger put a positive spin on the news, stating the company continues to drive forwards on all facets of its technology and it is “executing well on our roadmap to regain transistor performance and power performance leadership by 2025”.

He added its respect for Tower Semiconductor “has only grown through this process and we will continue to look for opportunities to work together in the future”.

When it announced the deal, Intel explained it was aiming to use Tower Semiconductor to expand its manufacturing capacity, global footprint and portfolio in response to rising demand.

The tie-up was intended to advance Intel’s IDM 2.0 strategy, which includes its Intel Foundry Services unit set up in 2021.