While the original deal was meant to provide Intel with financial flexibility and enabled it to divert funds for the development of advanced manufacturing nodes, the chipmaker says the move to now fully own Fab 34 reflects in part its ‘continued business momentum’ with CPUs.
Intel said Wednesday that it will spend $14.2 billion to repurchase the minority interest held by a private equity firm in a joint venture related to its fabrication plant in Ireland.
The Santa Clara, Calif.-based semiconductor giant said the deal it reached with private equity firm Apollo represents a reversal of the agreement they struck in 2024 for the latter party to buy a 49 percent minority stake in the joint venture for Intel’s Fab 34 in Ireland. Apollo had paid $11 billion for minority ownership of the joint venture.
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While the original deal was meant to provide Intel with “significant financial flexibility” and enabled it to divert funds for the development of advanced manufacturing nodes such as Intel 18A, the chipmaker said the move to now fully own Fab 34 reflects its “continued business momentum” with CPUs and a “significantly strengthened balance sheet.”
Intel’s optimism about its CPU business is based on what it called the “growing and essential role CPUs play in the era of AI.”
“Our 2024 agreement was the right structure at the right time and provided Intel with meaningful flexibility, enabling us to accelerate critical initiatives,” Intel CFO David Zinsner said in a statement. “Today, we have a stronger balance sheet, improved financial discipline and an evolved business strategy.”
Intel’s stock price was up more than 10 percent late morning.
Intel’s original deal with Apollo for the Fab 34 joint venture was part of the company’s “smart capital” strategy that was devised under former CEO Pat Gelsinger. The approach was meant to give “innovative ways to fund growth while creating further financial flexibility to accelerate” the company’s evolving manufacturing strategy.
The Fab 34 joint venture was the second deal of its kind after Brookfield Asset Management agreed in 2022 to jointly invest up to $30 billion with Intel in the company’s manufacturing expansion at its Ocotillo campus in Chandler, Ariz. This resulted in the alternative asset management firm gaining minority ownership in two new fabs.
The company struck these agreements as it dealt with a downturn in demand in the face of growing competition and internal challenges.
In recent months, Intel has said it is experiencing higher-than-expected demand for its server CPUs due to the ongoing AI data center buildout, with the rise of agentic AI workloads putting greater emphasis on such processors.
This has resulted in a broader CPU shortage across server and client products at the company, with expectations for supply to improve after March.
In turn, Intel has raised CPU prices for OEMs, company executive David Feng confirmed to CRN last week. He also cited “commodity price increases” as another factor.
“We have been updating our prices to the OEMs,” Feng said. “OEMs are working closely with their downstream partners to reflect system price points accordingly.”
