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Intel and Brookfield announce $30 billion fundraising deal to finance chip manufacturing development

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News Tech: As the chipmaker works to finance the construction of sizable domestic manufacturing plants following the approval of historic semiconductor legislation in the US, Intel has partnered with Brookfield Infrastructure Partners to fund the development of a $30 billion (€30 billion) semiconductor fabrication plant in Arizona.

According to Intel Chief Financial Officer David Zinsner, “our arrangement with Brookfield is a first for our industry and we think it will allow us to expand flexibility while keeping capacity on our balance sheet to create a more diversified and robust supply chain.”

Brookfield, which has experience building infrastructure assets including transmission lines, data centres, and wireless cell towers, is investing $15 billion for a 49% stake in Intel’s expansion of its Arizona location. Intel will keep a 51% ownership in the partnership, which it called “a new finance model to the capital-intensive semiconductor sector.”

In order to reclaim market share from companies like Taiwan’s TSMC and South Korea’s Samsung, Intel has made a deliberate effort to increase chip production.

“This landmark arrangement is an important step forward for Intel’s Smart Capital approach and builds on the momentum from the recent passage of the Chips Act in the US,” Zinsner said.

Intel has two plants under construction at its site in Chandler, Arizona, which are expected to come online in 2024. It announced plans this year to invest $20 billion to build two chip factories at a new site in Ohio. The company has also said it plans to pour $30 billion into chip manufacturing in Europe, utilising state subsidies to build a new plant in the German city of Magdeburg. Intel surprised investors last month when it reported a sharp drop in revenues and slashed its outlook for the financial year, attributing the weaker than anticipated performance to supply chain disruptions, worsening economic conditions and pressure from competitors.

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Intel shares have fallen more than 35 per cent this year. Shares were up 1.5 per cent in trading on Tuesday morning. — Copyright The Financial Times Limited 2022.

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