Intel, Apollo Join Forces For Fab 34 Venture

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Intel and Apollo entered an agreement for a multi-billion dollar investment in Fab 34, Intel’s semiconductor-producing plant in Ireland. 

Intel Corporation and New York-based investor Apollo (APO) have reached an agreement. Under this deal, Apollo-led funds and affiliates will inject a substantial $11 billion into a 49% stake associated with Intel’s Fab 34. The transaction is expected to close in the second quarter of FY 2024.

Situated in Leixlip, Ireland, Fab 34 is Intel’s high-volume manufacturing (HVM) plant. It has been operating since September 2023 and specialises in wafers employing Intel 4 and Intel 3 process technologies. The company has stated that its construction is ‘largely complete.’ 

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The agreement grants the joint venture permission to manufacture wafers at the unit, following a cost-plus-margin model. Intel retains a controlling 51% stake. It will also have full ownership and operational control of Fab 34 and its assets. 

As per the deal, Intel must complete Fab 34 and buy wafers from the venture, meeting volume commitments for its own and external customers’ needs. Financially, Intel plans to consolidate the venture’s results in its net income, accounting for the non-controlling interest’s share separately. 

Intel has claimed that initially, income attributed to this interest will be low but is expected to rise as the factory reaches full capacity.

Apollo’s investment is part of Intel’s capital strategy, the second Semiconductor Co-Investment Program (SCIP). Until now, Intel has invested $18.4 billion in Fab 34. This deal will let Intel free up and reallocate some of this investment for other areas of its business while still progressing with Fab 34’s development.

Apart from Fab 34, Intel also operates Fab 24 in Leixlip, a site for producing 14-nanometer silicon microprocessors and supporting Intel Foundry customers. The deal with Apollo specifically concerns Fab 34.

David Zinsner, Intel’s CFO, noted that the agreement will enhance Intel’s flexibility in executing its plan to establish a resilient semiconductor supply chain. The investment will let Intel meet the rising silicon demand, as the global semiconductor market is expected to double in the next five years. 

Apollo Partner Jamshid Ehsani described the transaction as a significant capital move. Apollo is focused on strengthening supply chains and using private capital to support the development of the New Economy, including investments in sustainable power, data centres, foundries, and semiconductor technology for AI.

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