(Times Of Update) — Intel Corp. agreed to sell a stake in a factory in Ireland to Apollo Global Management Inc. for $11 billion, helping to attract more external financing for a massive expansion of its factory network.
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Under the terms of the deal, the investment firm will take a 49% stake in a joint venture that owns Intel’s Fab 34, the chipmaker said in a statement Tuesday. This is the second such investment program announced by Intel, as part of an effort to ease the burden on its already strained finances.
CEO Pat Gelsinger is proposing an ambitious and expensive plan to return Intel to the top of the semiconductor industry. It is investing heavily to revitalize its ailing product line and is pouring money into factories around the world, aiming to reinvigorate its manufacturing and attract external outsourced manufacturing customers.
Intel, once the richest company in the semiconductor industry, has been forced to seek external financing under a program dubbed “Smart Capital.”
“This announcement highlights Intel’s continued progress in its transformation strategy,” the company said in the release. “The company continues to make progress to create financial flexibility and accelerate its strategy, including investing in global manufacturing operations, while maintaining a strong balance sheet.”
Intel said construction of the factory, at an existing company site in Leixlip, near Dublin, is “substantially complete”. The transaction, which allows Intel to put its money elsewhere, will be finalized in the second quarter of 2024. Fab 34 will use Intel’s Process 4 and 3 technologies.
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 helped allay fears that Gelsinger’s recovery plan would prove too costly. A string of weak financial results – as well as losing market share to rivals such as Nvidia Corp. – have reignited these concerns and weighed on Intel’s shares.
The shares, which fell less than 1 percent to $30.03 Tuesday in New York, are the worst-performing member of the Philadelphia Stock Market’s semiconductor index. They are down 40%.
(Updates with company comment, details of previous agreement from third paragraph.)
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