IntelIs it possible to buy Israeli chipmaker Tower SemiconductorOn Tuesday, the companies disclosed that $5.4 billion was paid. That will allow it to access more specific production techniques and make it better equipped to respond to rising demand.

Tower is being purchased by Intel for $53 per share. Tower, which specialises in analog chips that are used in medical sensors, cars and power management systems, closed Monday’s closing at $33.13.

Tower Tel Aviv listed shares rose 40% on Tuesday, despite a delay in their opening.

Following news that a takeover had been announced, the shares jumped 48% after-hours on Nasdaq. Tower was valued at $3.6 billion prior to this announcement.

Intel will acquire TSMC in Taiwan, which is the largest chipmaker worldwide, to increase its presence in a sector dominated by TSMC. This comes at a time where the shortage of semiconductors has hampered all aspects of production, including smartphones and cars.

Tower invested in equipment to expand its capacity for 300 and 200 millimeter chips at its three manufacturing plants in Israel, Texas, and Japan. According to the companies, Tower serves both “fabless” firms that design chips and outsource manufacturing. It also offers over 2 million wafers per year.

Pat Gelsinger, Intel Chief Executive said that Tower’s special technology portfolio and geographic reach “will help Intel scale its foundry services to increase our global presence in this area.”

“This deal will enable Intel to offer a compelling breadth of leading-edge nodes and differentiated specialty technologies on mature nodes – unlocking new opportunities for existing and future customers in an era of unprecedented demand for semiconductors,” he said in a statement.

Intel is Israel’s most important exporter and has a strong presence there for almost 50 years. It bought Israeli company Mobileye, an Israeli manufacturer of autonomous vehicles technology in 2017, for $15.3 billion. It has 5 Israeli sites and 14,000 employees.

Both boards have unanimously approved the transaction and it is anticipated that it will close within 12 months. Tower shareholders must approve the deal.

The acquisition is expected to immediately add to Intel’s non GAAP earnings per share. Intel indicated that the company intends to pay cash out of its balance sheet for financing the acquisition.

According to the companies, Tower will be independent up until the closing of the deal. Tower, the companies stated that Tower would then be integrated in Intel Foundry Services IFS (Intel Foundry Services), which Intel created a year ago to meet increasing global demand for high-quality semiconductor manufacturing capacities.