Asset management behemoths Apollo Global Management, KKR & Co., and Stonepeak are reportedly in discussions about a potential joint venture that could lead to a sizable investment in Intel’s semiconductor manufacturing operations situated in Leixlip, Ireland. Should an agreement be reached, the firms would collectively fund Intel’s fabrication plant and in return, acquire an ownership interest in the facility.
Earlier in February, there were indications that Intel was seeking around $2 billion to support its chip production activities in Ireland. Sources with knowledge on the subject revealed that Intel has engaged a financial advisor to help draw in investors for this initiative. However, since these discussions are ongoing and the sources are not official, caution is advised in interpreting this information.
Intel’s Fab 34 in Ireland stands as Europe’s most technologically advanced semiconductor production site, equipped with extreme ultraviolet (EUV) lithography. It is here that Intel manufactures compute tiles for its Core Ultra Meteor Lake CPUs using its cutting-edge Intel 4 process technology. Plans are also in place for the fab to produce certain upcoming Xeon processors for data centers.
While a $2 billion investment is substantial, it falls short of the capital required to build an entirely new fabrication plant. Instead, the funds are likely earmarked for the enhancement or enlargement of existing facilities to accommodate more sophisticated technologies such as Intel 3, Intel 20A, and Intel 18A processes. Such expansion is crucial for Intel to not only increase its production capabilities but also to fulfill the demands of Intel Foundry Services, which provides semiconductor manufacturing services to third-party chip designers.
The proposed joint venture echoes a similar collaboration in 2022, where Brookfield Infrastructure Partners agreed to put forth up to $15 billion for a 49% stake in the expansion of Intel’s Ocotillo campus in Chandler, Arizona. This partnership, totaling $30 billion in investment, allowed Intel to boost its initial $20 billion commitment for the construction of Fab 52 and Fab 62 by an additional $10 billion, thus providing Intel with a significant increase in available funds.
Intel’s strategic financial planning, evident in its partnership with Brookfield, allowed for a more effective allocation of resources and capital management. The success of this approach has set a precedent for Intel, which it now intends to replicate with its expansion plans in Ireland.
