Intel's decision to scrap a $5.4bn (£4.2bn) international chip deal to acquire Tower Semiconductor has been considered a result of deteriorating relations between Beijing and Washington.
The two companies said the decision was mutual and had been made after Chinese regulators failed to approve the deal by a deadline, despite Intel CEO Patrick Gelsinger's trips to the Asian country to get the deal greenlighted.
Intel said that the deal was terminated "due to the inability to obtain in a timely manner the regulatory approvals required under the merger agreement".
"Our foundry efforts are critical to unlocking the full potential of IDM 2.0, and we continue to drive forward on all facets of our strategy," Gelsinger said. "We are executing well on our roadmap to regain transistor performance and power performance leadership by 2025, building momentum with customers and the broader ecosystem and investing to deliver the geographically diverse and resilient manufacturing footprint the world needs.
"Our respect for Tower has only grown through this process, and we will continue to look for opportunities to work together in the future."
The merger was first agreed upon over a year ago, in February 2022, and the deadline for the approval was set to be Wednesday 17 August.
"Tower was very excited to join Intel to enable Pat Gelsinger's vision for Intel's foundry business," said Russell Ellwanger, Tower Semiconductor's CEO, in a written statement. "We appreciate the efforts by all parties."
US-listed shares of the Israeli company fell about 11 per cent in premarket trading after the news was made public.
In June last year, US commerce secretary Gina Raimondo warned that the global semiconductor crisis was likely to last deep into 2023. In July, the US Senate voted to advance its long-awaited $52bn bill to boost the country's domestic semiconductor industry, in part as a response to the global chip shortage, but also towards reducing US reliance on Chinese exports.
By January of this year, Dell announced that it was taking significant steps to end its use of Chinese-made components, starting with silicon chips, and with the intention of entirely ending its use of semiconductors made in China by 2024.
Meanwhile, in the UK, the government was accused of putting the UK's own semiconductor industry at risk with the continuing delay in publishing its strategy to ensure the security of the supply chains for chips. MPs on the Business, Energy and Industrial Strategy (BEIS) committee warned that the development of the UK's burgeoning industry was at risk.
