Intel sells off half its Irish fab for $11bn
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Intel has sold 49% of its Fab 34 in Leixlip, Ireland, to an equity fund.
Funds managed by Apollo will lead an investment of $11bn for 49% of a joint venture with Intel for Fab 34 after months of rumours. This is Intel’s second Semiconductor Co-Investment Program (SCIP) deal after Chandler, Arizona in 2022 and is expected to complete later this month.
SCIP is an element of the Smart Capital strategy, a funding approach designed to provide cash for its strategy to win back the leadership in chip process technology and manufacturing.
Fab 34 is a high-volume plant designed for the Intel 4 and Intel 3 process technologies. To date, the company has invested $18.4 billion in Fab 34, hence the $11bn price tag for a half share. This compares to $20bn for the Intel 18A fabs being built in Ohio and $8bn for a high volume 40nm fab by VSMC in Singapore.
Intel unveils semiconductor co-investment program
The deal with Apollo only covers the Fab 34 joint venture, as yet unnamed, and Intel says this will allow it to unlock and redeploy a portion of the investment to other parts of its business while continuing the build-out of Fab 34, which Intel says is ‘largely complete’. The ramp of the latest Granite Rapids data centre product on Intel 3 technology, is well underway at the fab.
Fab 34 was only opened in September 2023, marking the first use of extreme ultraviolet lithography (EUV) in high-volume manufacturing in Europe to support high-volume production of 3nm and 4nm technologies. The original fab at the site, Fab 24, has been a key location for production of Intel’s 14nm microprocessors, while also preparing to support Intel Foundry customers.
Under the agreement, the joint venture will have rights to manufacture wafers at Fab 34 to support long-term demand for Intel’s products and provide capacity for foundry customers. Intel will have a 51% controlling interest in the joint venture and will retain full ownership and operational control of Fab 34 and its assets.
“Intel’s agreement with Apollo gives us 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 U.S. 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,” said David Zinsner, Intel CFO.
“This transaction allows us to share our investment with an established financial partner on attractive terms while maintaining our strong investment-grade credit rating.”
“This highly strategic capital transaction is among the largest private investments of its kind and showcases Apollo’s ability to provide creative, scaled capital solutions to leading corporations and infrastructure, and to contribute to supply chain resiliency. It also underscores our role as a trusted financing partner, leveraging private capital to help build the New Economy, including next generation AI technology which will require major investments in sustainable power generation, data centers, foundries and semiconductor capabilities,” said Apollo Partner Jamshid Ehsani.
The joint venture will manufacture wafers for sale to Intel on a cost-plus-margin basis. Under the agreement, Intel is required to finish the build-out of Fab 34 and purchase wafers from the joint venture for itself and external customers, with minimum volume commitments for its wafer demand following the substantial completion of the facility.
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