Intel sells 49pc stake in Ireland fab to Apollo for $11bn

5 Jun 2024

Image: © Tada Images/Stock.adobe.com

Located at the company’s site in Leixlip, Co Kildare, Fab 34 was a project that started in 2019 and has since received around $18.4bn in investment from Intel.

Intel has agreed to sell a 49pc stake in its Fab 34 chip plant in Leixlip, Ireland to investment firm Apollo Global Management.

The $11bn deal is part of Intel’s effort to expand its chip manufacturing facilities while maintaining a 51pc controlling interest in the joint venture. Intel said that it will retain full ownership and operational control of Fab 34 and its assets.

Located at the company’s site in Leixlip, Co Kildare, Fab 34 was a project that started in 2019 and has received $18.4bn investment from Intel to date. The “high-volume” facility hit a milestone last August when it started running its “First Full Loop” of silicon, which means the facility managed to run silicon wafers from start to finish through the process steps in the cleanroom.

Intel had been in talks with Apollo about this deal for weeks. Intel posted a disappointing earnings forecast in April that saw shares fall around 8pc in the immediate aftermath of the report. Revenue from Intel Foundry – its three-year-old contract chipmaking business – was down 10pc to $4.4bn.

Earlier this year, the company shared details of its financial results from the past few years, showing a significant decline for its foundry business – which reported operating losses of nearly $7bn last year. These losses are expected to grow.

Now, Intel says the latest deal with Apollo will “enhance the company’s strong balance sheet with capital at a cost below Intel’s cost of equity”.

David Zinsner, chief financial officer at Intel, said the agreement gives the chip manufacturer “additional flexibility to execute our strategy as we invest to create the world’s most resilient and sustainable semiconductor supply chain”.

“Our investments in leading-edge capacity in the US and Europe will be critical to meet the growing demand for silicon, with the global semiconductor market poised to double over the next five years,” Zinsner said. “This transaction allows us to share our investment with an established financial partner on attractive terms while maintaining our strong investment-grade credit rating.”

Ireland is one of several locations around the world that Intel is planning to expand and build new chip factories in – including the US states of Arizona and Ohio – to meet a surge in demand for semiconductors and compete with the likes of Taiwan Semiconductor Manufacturing Company (TSMC) and Samsung. The company headquartered in Santa Clara, California, has had operations in Ireland for decades.

To keep up in the global AI race, Intel unveiled a new AI chip called Gaudi 3 in April that it claims has better performance and energy efficiency than its Nvidia counterpart, the popular H100.

Find out how emerging tech trends are transforming tomorrow with our new podcast, Future Human: The Series. Listen now on Spotify, on Apple or wherever you get your podcasts.

Vish Gain is a journalist with Silicon Republic

editorial@siliconrepublic.com