Intel is introducing more external funding for its large-scale expansion plan. On Tuesday (June 5th), Intel agreed to sell a portion of its equity in a factory in Ireland to Apollo Global Management for $11 billion.
According to Intel's statement on Tuesday, Intel will sell 49% of its shares in entities related to the Fab 34 chip factory in Ireland. Intel will retain 51% of its shares to maintain its controlling stake in the company, and the transaction is expected to be completed in the second quarter of 2024.
Intel's Fab 34 chip factory in Ireland is Intel's leading High Volume Manufacturing (HVM) factory and the only chip manufacturing plant in Europe that uses Extreme Ultraviolet (EUV) lithography technology. This factory provides support for wafers using Intel 4 and Intel 3 processes.
So far, Intel has invested $18.4 billion in Fab 34.
The deal with Apollo allows Intel to monetize some of its investments and redeploy them to other businesses, while also continuing to expand Fab 34.
This transaction is Intel's second Semiconductor Co Investment Program (SCIP) announced. The SCIP program aims to create financial flexibility to accelerate the company's strategy, including investing in its global manufacturing business while maintaining a strong balance sheet.
The previous SCIP plan occurred in 2022. At that time, Intel reached a partnership with Brookfield Asset Management to provide funding for a $30 billion semiconductor manufacturing plant in Arizona, with Intel contributing 51% of the total project cost and Brookfield contributing 49%.
Relieve financial pressure
Intel CEO Pat Gelsinger is currently pushing for an ambitious and costly plan to bring Intel back to the pinnacle of the semiconductor industry. He is investing heavily in revitalizing his struggling product lineup and investing in factories around the world with the aim of revitalizing his manufacturing industry and attracting more outsourcing customers.
The company stated in a statement, "This statement highlights Intel's continued progress in its transformation strategy. The company will continue to promote the creation of financial flexibility and accelerate its strategy, including investing in global manufacturing while maintaining a strong balance sheet."
The collaboration with Apollo has helped alleviate concerns about the high cost of the Gelsinger industry revival plan.
Intel was once a leader in the semiconductor industry, but as the wave of artificial intelligence swept through the global technology industry, Intel's market share was gradually taken away by competitors such as Nvidia. Previously, Intel also released a series of relatively weak performance reports, which raised concerns about Intel's financial situation.
To this end, Intel began implementing a strategy called "smart capital", seeking external funding assistance. Among them, the Joint Investment Plan (SCIP) is an important component of this strategy.
The stock fell less than 1% to $30.03 in New York trading on Tuesday, with a 40% drop so far this year, making it the worst performing component of the Philadelphia Semiconductor Index.