Intel has partnered with Brookfield Infrastructure Partners to fund the development of a $30 billion (€30 billion) semiconductor fab in Arizona, as the chipmaker works to fund the construction of large domestic manufacturing plants following the approval of landmark semiconductor legislation in the US.

Brookfield is investing $15 billion for a 49% stake in Intel’s expansion of its Arizona site and bringing its experience in developing infrastructure assets such as transmission lines, data centers and wireless cell towers. Intel, which described the partnership as “a new funding model for the capital-intensive semiconductor industry,” will retain a 51% stake.

“Our agreement with Brookfield is a first for our industry, and we expect it will allow us to increase flexibility while maintaining the capacity of our balance sheet to create a more distributed and resilient supply chain,” said David Zinsner. , CFO of Intel.

The expansion is part of a concerted effort by Intel to boost chip manufacturing, as the company seeks to regain market share from groups such as TSMC in Taiwan and Samsung in South Korea.

Taking on the Canadian asset management group as a large private equity partner, Intel said the deal will give it the financial flexibility it needs to continue funding its growing dividend. The partnership is expected to boost Intel’s free cash flow by $15 billion over the next few years, the company said.

Tax credits

The announcement follows the passage of US President Joe Biden’s Chips Act earlier in August, which provided $52 billion in incentives for the US semiconductor industry. Congress is also considering another bill to establish tax credits for semiconductor investments in the United States.

“This landmark agreement is a significant step forward for Intel’s Smart Capital approach and builds on the momentum of the recent passage of the Chips Act in the United States,” Zinsner said.

Intel has two factories under construction at its Chandler, Ariz., site that 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 the ‘Ohio. The company also said it plans to invest $30 billion in chip manufacturing in Europe, using state subsidies to build a new factory in the German city of Magdeburg.

Intel surprised investors last month by reporting a sharp decline in revenue and slashing its outlook for the fiscal year, blaming the weaker-than-expected performance on supply chain disruptions, deteriorating conditions economics and pressure from competitors.

Intel shares have fallen more than 35% this year. The shares rose 1.5% in trading Tuesday morning. —Copyright The Financial Times Limited 2022

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