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Intel (NASDAQ: INTC) has sealed a deal to divest a significant portion of its Irish venture to Apollo Global Management (NYSE: APO) for a hefty $11 billion. This strategic move is aimed at drawing more external capital to bolster the ambitious expansion of Intel's global factory network, particularly its crucial facility in Ireland.
According to the arrangement, Apollo will acquire a 49% stake in the joint venture that manages Intel’s Fab 34 facility. This venture is a pivotal part of Intel's strategy to mitigate the financial strain from its extensive growth plans. Pat Gelsinger, the CEO of Intel, is on a mission to reclaim Intel's dominance in the semiconductor sector by rejuvenating its product lineup and investing heavily in state-of-the-art manufacturing capabilities. His vision includes attracting third-party manufacturing customers to Intel's upgraded facilities.
Once the semiconductor titan with robust finances, Intel has had to seek external funding under the program it's dubbed “Smart Capital.” This latest investment underscores Intel's ongoing transformation. The company noted that this transaction will enhance its financial framework, enabling it to invest in worldwide manufacturing while maintaining fiscal stability.
The Leixlip-based plant, nearing completion, is set to deploy Intel’s cutting-edge 4 and 3 manufacturing technologies. The transaction, expected to wrap up in the second quarter of 2024, stipulates that Intel will purchase a minimum output from the factory, either for its own distribution or on behalf of its clients. Further, the agreement grants preferential status to Fab 34 within Intel’s manufacturing network when allocating production tasks.️
This isn't Intel’s first move to bring in substantial external funding. In 2022, the company locked in a $15 billion investment from Brookfield Infrastructure Partners LP to finance an advanced semiconductor complex in Arizona. Such maneuvers have alleviated some concerns about the hefty costs associated with Gelsinger's revival strategy. However, persistent weak earnings and a dwindling market share, with rising competition from companies like Nvidia (NASDAQ: NVDA), continue to weigh on Intel’s performance.
Intel’s stock has taken a hit, dropping nearly 1% to $30.03 in recent trading sessions in New York. It's currently one of the poorest performers on the Philadelphia Stock Market Semiconductor Index, experiencing a 40% decline. Investors and traders alike will be keenly watching to see if these strategic moves can foster a turnaround for the once-dominant chipmaker.
Stay tuned to StockInvest.us for the latest updates and in-depth analyses on Intel and other key players in the semiconductor industry.
