The logo of Israeli chipmaker TowerJazz is seen at their offices in Migdal HaEmek, northern Israel September 13, 2017. REUTERS/Ronen Zvulun

Intel Corp is buying Israeli chipmaker Tower Semiconductor for $5.4 billion, the companies said on Tuesday, giving it access to more specialized production and making it better positioned to take advantage of soaring demand for semiconductors.

Intel is paying $53 per share for Tower — which specializes in analogue chips used in cars, medical sensors and power management — well above a closing price of $33.13 on the Nasdaq on Monday.

After a delayed opening, Tower’s Tel Aviv-listed shares were 40% higher on Tuesday.

They had surged 48% in after-hours trading on Nasdaq on Monday after news of a possible takeover was reported. Prior to the announcement, Tower had a market value of $3.6 billion.

The acquisition will deepen Intel’s presence in a sector dominated by Taiwan-based TSMC, the world’s largest chipmaker, at a time when the global semiconductor shortage has hampered the production of everything from smartphones to cars.

Tower has been investing in equipment at its manufacturing sites in Israel, Texas and Japan to boost capacity for 200 and 300 milimeter chips. The company serves “fabless” companies — which design chips but outsource manufacturing — as well as integrated device manufacturers and offers more than 2 million wafer starts per year of capacity, the companies said.

Tower Semiconductor changed its name from TowerJazz in 2020.

“Tower’s specialty technology portfolio (and) geographic reach … will help scale Intel’s foundry services and advance our goal of becoming a major provider of foundry capacity globally,” said Intel Chief Executive Pat Gelsinger.

“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.

The US chipmaker said last month it would invest up to $100 billion to build potentially the world’s largest chip-making complex in Ohio. The move is aimed at restoring Intel’s dominance in chip-making and reducing America’s reliance on Asian manufacturing hubs.

Intel has had a large presence in Israel for nearly 50 years and is one of Israel’s largest exporters. In 2017 it bought Israeli autonomous vehicle technology firm Mobileye for $15.3 billion. The chipmaker has five sites in Israel and some 14,000 employees.

The transaction is expected to close in about 12 months and has already been unanimously approved by both boards. The deal is still subject to certain regulatory approvals including the approval of Tower’s shareholders.

It is expected to be immediately accretive to Intel’s non-GAAP earnings per share. Intel said it intends to fund the acquisition with cash from its balance sheet.

Tower, the companies said, will remain independent until the deal closes. Then, Tower will be integrated into Intel Foundry Services (IFS), which Intel established a year ago to help meet growing global demand for semiconductor manufacturing capacity.

Tower will issue its fourth-quarter and fiscal year 2021 financial results on Thursday, but will not issue first-quarter guidance because of the deal, they said.