What happened

Shares of Tower Semiconductor (TSEM -0.29%) are gaining in Wednesday's trading. The company's stock was up 6.5% as of 1:45 p.m. ET today.

Tower Semiconductor, which is on track to be sold to Intel, published results for its second quarter before the market opened today, delivering sales and earnings that beat Wall Street's targets. The stock is also getting a boost from news that China's antitrust regulator has approved a merger between two other companies in the semiconductor space. 

So what

Tower recorded earnings per share (EPS) of $0.46 on revenue of $357 million, topping the average analyst estimate's call for EPS of $0.43 on sales of $354.53 million, according to a poll by Refinitiv. Revenue was roughly flat on a sequential quarterly basis, but it was down roughly 16% year over year. Meanwhile, EPS was down 13% year over year. 

More so than with its second-quarter performance, the boost for Tower is regulatory news out of China. The Israel-based company, which specializes in the fabrication of analog semiconductors, is poised to be purchased by Intel in a $5.2 billion deal but needs to clear key regulatory hurdles.

With news today that China's antitrust authority had approved MaxLinear's $3.8 billion purchase of Silicon Motion, investors seem more optimistic about the acquisition of Tower Semiconductor being completed.

Now what

With the company seemingly on track to be sold to Intel, management opted not to provide third-quarter guidance. For the time being, Tower's stock will likely be trading in conjunction with forthcoming news on the acquisition front. 

At its current stock price, the fabrication specialist would offer roughly 28% upside if the purchase is completed. On the other hand, it's hard to predict what antitrust regulators will do in this case. Given that Intel is a much bigger player in semiconductors than MaxLinear, it doesn't make sense to assume that the Tower buyout will necessarily go through.

If the deal winds up being blocked, it's likely that Tower Semiconductor stock would decline significantly from its current level.