Intel announced a $30 billion funding partnership deal with Brookfield Asset Management to jointly invest in fab expansion at its Ocotillo campus in Chandler, Arizona.
Intel will fund 51% and Brookfield 49% of the project cost while Intel remains majority owner with operating control of two new leading-edge chip factories in Chandler that it previously announced, Intel said Tuesday.
The deal gives Intel the ability to tap into a new pool of capital while protecting its cash and debt capacity for future investments. It is structured so Intel has $15 billion for its adjusted free cash flow.
Intel CFO David Zinsner said the deal with Brookfield is a first for the industry. The deal is part of a new Semiconductor Co-Investment Program designed to help allay enormous costs to build chip fabs.
In an early morning call, Zinsner said the original $20 billion cost for the Arizona expansion was an early estimate that will increase due to inflation. The company also expects to spend as much as $100 billion each on new fabs in Ohio and Germany.
Intel CEO Pat Gelsinger outlined the need for more advanced chips at the Hot Chips symposium on Monday and described Intel’s potential to meet rising demand.
He projected chip revenues globally to reach $1 trillion by 2030, up from an IDC estimate of $638 billion for all of 2022.
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In 2030, Gelsinger also said a single processor will contain 1 trillion transistors, with current processors in the multiple billions. The Pentium of 1993 had two processors on a single chip with 3.3 million transistors by comparison.
Intel’s forecast is possible with recent chip innovations such as the use of multiple chiplets on a single substrate. New fabs will allow Intel to use the advance process with chiplets for its own chips and for chips designed by other companies that use Intel Foundry Services.
Even as Intel announced the deal with Brookfield, it specifically said it “intends to continue its use of external foundries where their unique capabilities support Intel’s leadership products.”
As Gelsinger spoke virtually at Hot Chips on Monday, Intel shares dropped 4.3% by the end of the day amid a loss of 36% since the start of the year. But the Brookfield deal helped a revival on Tuesday of 1.2% in morning trades.
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