Thursday, May 30, 2024

Intel in advanced talks for €10bn investment in Ireland

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Chipmaker Intel is in advanced negotiations with Apollo Global Management to finance an investment of more than $11bn (€10.2bn).

The Wall Street Journal has reported that the deal could be agreed in the coming weeks, and that Intel will use the funding to help build a chip factory at its campus in Leixlip in Co Kildare.

Apollo is now in exclusive talks to finance Intel’s push in Ireland after pulling ahead of rival investment firms such as KKR and Stonepeak that were also in discussions with the company.

The move comes as Intel looks to expand in the US as part of a $100bn (€93bn) spend to boost its manufacturing business so it can make chips for other companies and rival market leaders in the space such as Samsung and Taiwan Semiconductor Manufacturing Company (TSMC).

Intel’s ability to fund the building of chip factories from its own reserves has been hampered by a slowdown in its core business of supplying chips for personal computers and servers, with the firm’s revenue and profit forecasts for the second quarter coming in below market estimates.

The company’s share price has fallen by more than a third so far this year, and it has delayed construction of a planned $20bn chip manufacturing facility in Ohio.

Intel announced plans in 2022 to build chip facilities in Ireland and France as it seeks to benefit from easier European Commission funding rules and subsidies.

CEO Pat Gelsinger said last year, however, that Ireland would have to compete for future investments by the company.

Intel’s Irish facilities are mainly focused on making the company’s own branded chips.

Gelsinger was speaking at the opening of Intel’s Fab 34 manufacturing facility in Leixlip, part of a €17bn investment to double the firm’s manufacturing space in Ireland.

When production is fully ramped up, the company will employ 6,500 people in the country.

Intel announced in April that its foundry division had sales of $18.9bn, down from $27.5bn a year earlier and warned that it may not break even for several more years as it seeks to break the stranglehold of its Asian rivals on chip production.

Intel is reportedly on the verge of agreeing $11bn in financing for an Irish chip factory. (Pic: Getty Images)

The company previously struck a $30bn funding agreement with Brookfield Asset Management in a deal that called for Intel to fund 51% of the cost of building new chip-making facilities in Arizona, and have a controlling stake in the vehicle that would own the new factories.

Intel has also sought US government grants under the Chips Act, passed in 2022, and has received $3.2bn from the Israeli government to build a $25bn chip plant there.

(Pic: Getty Images)

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