Suspense crime, Digital Desk : Intel has confirmed it is shutting down one of its internal divisions and laying off most of its employees, a direct consequence of the company’s failed $5.4 billion acquisition of Israeli chipmaker Tower Semiconductor.

The division being dismantled is the “Foundry Direct Connect” group. This unit was specifically created to help integrate Tower Semiconductor’s business into Intel’s broader operations once the highly anticipated deal was finalized.

However, the acquisition, which was a key part of CEO Pat Gelsinger’s turnaround strategy, fell through last year after it failed to secure timely regulatory approval from China. With the deal officially dead, the division established to manage the integration has become redundant.

Intel has stated that most of the employees within the Foundry Direct Connect team will be laid off, though some may be offered other positions within the company.

This move should not be mistaken for a retreat from Intel’s larger ambitions. The company’s main “Intel Foundry” business—its massive strategic push to become a major contract manufacturer of chips for other companies and compete with giants like TSMC and Samsung—remains a top priority.

The shutdown of this smaller, specialized unit is a necessary and practical step to clean up the aftermath of the collapsed deal. It highlights the significant challenges and regulatory hurdles Intel faces as it navigates its ambitious and costly quest to reshape its business and reclaim its dominance in the global semiconductor market.

Read More: Intel Dismantles Chip Division, Announces Layoffs Following Collapse of $5.4B Tower Deal