JERUSALEM, (Reuters) –Intel Corp has signed a deal for Israeli chipmaker Israeli Chipmaker Tower Semiconductor (NASDAQ/NASDAQ:) Tuesday’s announcement by the two companies was a $5.4 billion deal. This comes as Intel (NASDAQ/) seeks to increase its production capacity and expand its portfolio of technology in response to rising demand.

Intel paid $53 for each Tower share. This is well over the closing Nasdaq price of $33.13 Monday.

Both boards have unanimously approved the transaction and it is anticipated that it will close within 12 months. The deal is still subject to certain regulatory approvals including the approval from Tower’s shareholders.

It is expected to be immediately accretive 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 in order to meet increasing global demand for high-quality semiconductor manufacturing capacities.

Tower Tel Aviv Shares were temporarily halted in the wake of this announcement. Trading has not begun yet.

Following news of an acquisition possibility, the shares rose 48% after hours on Nasdaq Monday.