Global asset manager Apollo will take a 49% equity interest in a joint venture entity related to Intel Corp.’s Fab 34 in Leixlip, Ireland, under a new definitive agreement between the companies.
Under the deal, Apollo managed funds and affiliates will lead an investment of $11 billion to acquire the equity interest.
The agreement is the second such agreement with an investment firm under its semiconductor co-investment program (SCIP). The first was with Brookfield Asset Management for the expansion of Intel’s Ocotillo campus in Chandler, Arizona, where the two companies would invest up to $30 billion with Intel owning 51% and Brookfield funding 49%.
The idea behind the funding strategy is that it will allow Intel to increase flexibility while maintaining capacity on its balance sheet to create a more distributed and resilient supply chain, the company said.
With the joint venture, both companies will have rights to manufacture wafers at Fab 34 to support long-term demand for Intel’s devices and provide capacity for Intel Foundry customers. Intel will retain a 51% controlling interest and retain full ownership and operational control of Fab 34.
Fab 34 in Ireland is designed for wafers using the Intel 4 and Intel 3 processing technologies where Intel has already invested $18.4 billion. The deal will allow Intel to redeploy other parts of its business while continuing to build-out Fab 34.
“Intel’s agreement with Apollo gives us additional flexibility to execute our strategy as we invest to create the world’s most resilient and sustainable semiconductor supply chain,” said David Zinsner, Intel CFO. “Our investments in leading-edge capacity in the U.S. and Europe will be critical to meet the growing demand for silicon, with the global semiconductor market poised to double over the next five years.”
