Wafer Fab Sold Its Stake For $11 Billion

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Intel Corp. agreed to sell a stake in a joint venture that controls a factory in Ireland to Apollo Global Management Inc. for $11 billion to help bring more outside funding for the massive expansion of its factory network.

Under the terms of the deal, the investment firm will hold a 49% stake in the joint venture that operates Intel Fab 34, the chipmaker said in a statement Tuesday. This is the second such investment plan announced by Intel and aims to ease its already stretched financial burden.

CEO Pat Gelsinger is pursuing an ambitious and expensive plan to return Intel to the top of the semiconductor industry. He is investing heavily in reviving a struggling product lineup and pouring money into factories around the world with the aim of reviving its manufacturing industry and attracting outsourced manufacturing customers.

Once the richest company in the semiconductor industry, Intel is now being forced to seek outside funding to implement a program called "Smart Capital."

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

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

Under the terms of the agreement, Intel will purchase the minimum production volume of the factory for its own sales or on behalf of its customers. The agreement stipulates that the chipmaker will prioritize the plant over other factories in its network when choosing a production site. Construction will be substantially completed in June.

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

The deal helps alleviate concerns about the prohibitive cost of Gelsinger's revival program. A series of weak earnings results, as well as losing market share to competitors such as Nvidia Corp., have rekindled these concerns and put pressure on Intel's stock price.

Intel shares fell less than 1% to $30.03 in New York trading on Tuesday, making it the worst-performing stock in the Philadelphia Stock Market's semiconductor index. They are down 40%.

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