Foundry sells shares for $11 billion

Latest update time：2024-06-05

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Intel Corp. agreed to sell its stake in a joint venture that controls a factory in Ireland to Apollo Global Management Inc. for $11 billion, helping to bring in more outside money for a major expansion of its factory network.

Under the terms of the deal, the investment firm will take a 49 percent stake in the joint venture that operates Intel's Fab 34, the chipmaker said in a statement on Tuesday. It is the second such investment announced by Intel to ease its already stretched finances.

Chief Executive Officer Pat Gelsinger is pursuing an ambitious and expensive plan to return Intel to the top of the semiconductor industry. He is investing heavily to revive its struggling product lineup and pour money into factories around the world, aiming to revive its manufacturing and attract outside outsourcing customers.

Intel, once the wealthiest company in the semiconductor industry, has been forced to seek outside funding for a program it calls "Intelligent Capital."

"This announcement highlights Intel's continued progress on its transformation strategy," the company said in a statement. "The company continues to make progress on creating financial flexibility and accelerating its strategy, including investing in its global manufacturing operations, while maintaining a strong balance sheet."

Intel said construction of the plant, located on an existing company site in Leixlip near Dublin, is "substantially complete." The deal, which allows Intel to invest funds elsewhere, will be completed in the second quarter of 2024. Fab 34 will use Intel's 4 and 3 manufacturing technologies.

Under the terms of the agreement, Intel will purchase a minimum amount of the plant's output for sale either for itself or on behalf of customers. The agreement states that the chipmaker will give priority to the plant over others in its network when selecting production sites. Construction will be largely complete by June.

In 2022, Intel announced an agreement with Brookfield Infrastructure Partners LP to secure a $15 billion commitment to help finance a semiconductor complex in Arizona.

The deal helps ease concerns that Gelsinger’s turnaround plan is too costly. A string of weak earnings results and loss of market share to rivals such as Nvidia Corp. have reignited those concerns and weighed on Intel shares.

Intel shares fell less than 1% to $30.03 in New York trading on Tuesday, making them the worst performer on the Philadelphia Stock Market Semiconductor Index. They are down 40%.

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