Intel has agreed to implement the deal to sell a stake in a venture that controls a factory located in Ireland.
Apollo Global Management will become the new owner of the mentioned stake. Currently, it is known that the cost of this deal will amount to $11 billion. It is expected that the sale of the stake to Apollo will help to raise additional large-scale financing for a wide-ranging expansion of the production network. This is definitely a positive prospect for Intel as part of its commitment to its own development in the semiconductor industry space.
As part of the terms of the upcoming deal, it is envisaged that Apollo will receive a 49% stake in the joint venture that operates Intel’s Fab 34. The relevant information is contained in Intel’s official statement, which was published last Tuesday, June 4.
Apollo is a company that specializes in asset management. This firm invests primarily in alternative assets.
Interaction with Apollo, which provides for cooperation in the context of financial aspects of activities, is the second such program for Intel, implemented on a kind of external business contour. Currently, the technology company is striving for what can be described as optimization of its own costs. Intel is making efforts to reduce the burden on internal finances, which are already in a kind of tension zone.
Intel CEO Pat Gelsinger is currently focused on implementing a plan to return the company to the top of the semiconductor industry. The corresponding goal is very ambitious in terms of the proposed transformation of brand capacities and capabilities, expensive given the necessary financing to achieve it, and difficult in the context of the specifics of the materialization.
Pat Gelsinger is investing heavily in updating Intel’s product line, which has recently been facing difficulties amid very fierce competition. The head of the company is also actively investing in production facilities around the world. These efforts are aimed at intensifying the production process around the world and gaining customers who are engaged in outsourcing.
Intel, in more favorable periods of its history, was one of the richest companies in the semiconductor industry. However, any fame and success goes into the past, remaining a memory that exists only within memory. At the same time, past achievements can be regained or even surpassed. Intel operates within this concept. The company had to raise external financing, but these efforts significantly improved its prospects.
Intel’s official statement notes that the deal with Apollo highlights the company’s progress in implementing its transformation strategy. In this context, it was underlined that the firm continues to move forward to provide financial flexibility and accelerate the materialization of the mentioned strategy. These Intel actions involve investing in global manufacturing operations while maintaining a strong balance sheet.
The company, led by Pat Gelsinger, said construction of the plant at its existing site in Leixlip, near Dublin, has been largely completed.
The announced deal, which will allow Intel to invest in other projects, will be completed in the second quarter of the current year. Fab 34 will use Intel 4 and 3 manufacturing technologies. The company will buy a minimum amount of the output of the factory to sell itself or on behalf of customers. The firm will also give preference to this plant over other production sites in its network when choosing a manufacturing location.
In 2022, Intel announced the deal with Brookfield Infrastructure Partners. This business agreement provides for the allocation of funds for $15 billion to finance a semiconductor complex in Arizona.
The new deal is likely to help ease concerns that Intel’s transformation plan, followed by Pat Gelsinger, will prove too expensive. Currently, the company’s share price is in a kind of pressure zone, which was formed by factors such as weak earning figures and loss of market share on the background of higher results from competitors, including Nvidia. Concerns about Intel’s transformation prospects remain.
At the same time, the financial performance of the company is not totally negative. Intel’s revenue for the first quarter of the current year was $12.7 billion. This indicator increased by 9% compared to the result for the same period in 2023.
In 2022, Intel announced its intention to build chip manufacturing plants in Ireland and France. This decision of the company is to some extent due to its desire to take advantage of the easier funding rules and subsidies of the European Commission. Currently, the European Union is taking measures to reduce dependence on the United States and Asia for the supply of microcircuits.
