Intel struck a new agreement with Tower Semiconductor for the Israeli contract chipmaker to invest up to $300 million into a manufacturing plant in the US state of New Mexico, after a proposed merger between the pair fell through last month.

As part of the fresh agreement, Intel also stated it will provide foundry services to Tower Semiconductor and give support for the manufacture of 300mm chips, helping to meet growing demand globally.

The $300 million investment will be used by Tower Semiconductor to purchase equipment and other fixed assets, to be installed in the New Mexico facility.

Intel called off a $5.4 billion deal to acquire Tower Semiconductor in August, blaming an inability to obtain regulatory approvals in a timely manner.

Various media outlets have reported approval from Chinese authorities was the major stumbling block towards the deal being approved.

Intel CEO Pat Gelsinger suggested at the time relations with Tower Semiconductor were still positive and it would look for opportunities to work together in the future.

On the deal with Tower Semiconductor, Intel stated the agreement demonstrates the commitment from both companies “to expand their respective foundry footprint with unparalleled solutions and scaled capabilities”.

In 2021, the US chip giant committed to spend $3.5 billion in its New Mexico facility, which was followed by an announcement to spend $20 billion on a complex in the state of Ohio.