HONG KONG (AP) — Intel will terminate a $5.4 billion deal to acquire Israeli chip manufacturer Tower Semiconductor after China failed to sign off on the deal amid rising tensions with the United States.

It was a mutual decision between Intel and Tower, the companies said Wednesday. 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.”

Intel Corp. will pay Tower a termination fee of $353 million, the U.S. semiconductor giant said.

The deal required regulatory approval from several regulators worldwide including China, but Chinese regulators did not greenlight the deal by the Aug. 15 transaction deadline, even after Intel CEO Patrick Gelsinger traveled to China last month in a bid to win them over.

The scuttled deal between the two companies comes amid increasing U.S.-China tensions, particularly as the U.S. has tightened export controls and imposed restrictions aimed at crippling China’s ability to purchase and manufacture advanced chips.

In response, China’s antitrust regulator, the State Administration for Market Regulation, appears to have dragged its feet on approving mergers involving American companies, such as the Intel-Tower deal.

Intel originally aimed to close the deal by the first quarter of the year, but later extended the deadline after it failed to receive approval from China. Intel hoped that its acquisition of Tower would expand its manufacturing capacity and open up growth opportunities for the firm in U.S., Israel, Italy and Japan.

Tower’s stock price fell more than 11% in pre-market trading in the U.S. The company’s stock price in Tel Aviv also plunged over 10%.

“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 statement. “We appreciate the efforts by all parties.”