Chipmaker Intel Corp. said today it has sold a 49% stake in its new Fab 34 chip manufacturing facility in Leixlip, Ireland, in order to fund the ongoing development of the site, as well as other chip factories it’s building around the world.

The company said it raised $11 billion from the sale to private equity firm Apollo Global Management Inc. In exchange for the investment, Apollo will receive a 49% stake in a new joint venture entity that will own the facility.

Today’s deal is the latest in a string of deals made by the chip giant, which has been forced to get creative in order to fund an aggressive expansion of its global production capacity. Intel is building a series of new chip plants in Europe, the U.S. and elsewhere, as part of its strategy to catch up with the world’s No. 1 chipmaker, Taiwan Semiconductor Manufacturing Co.

In 2022, Intel announced it was selling a 49% stake in its Ocotillo campus in Chandler, Arizona, to another private equity firm, Brookfield Infrastructure Partners LLC, for about $15 billion.

In addition, Intel has received more than $19.5 billion in grants and loans from the U.S. government, through the CHIPS and Science Act, which aims to boost the country’s domestic chip manufacturing capacity. Other sources of funding include the Israeli and German governments, where it is also building new facilities.

Intel has reportedly invested $18.4 billion in the Irish Fab 34 facility, so the money from Apollo pays for a fairly hefty chunk of it. The chipmaker said the transaction will allow it to “unlock and redeploy to other parts of its business a portion of this investment, while continuing the build-out of Fab 34.”

The site is designed to support high-volume manufacturing of the company’s Intel 4 and Intel 3 process nodes, which are the most advanced it operates. Those chips are key to Intel Chief Executive Pat Gelsinger’s comeback plan for Intel. It needs the new manufacturing capacity to support an expected increase in demand for its most advanced chips, and to support its new contract chipmaking business, Intel Foundry.

The Intel Foundry business has operated as an independent entity since earlier this year, which means Intel’s chip product design teams are essentially treated the same as any other customer.

With regards to today’s deal, Intel said it will create a joint venture with Apollo that will own Fab 34. Intel will have a 51% stake and retain full operational control once the deal closes at the end of the current quarter.

Constellation Research Inc. analyst Holger Mueller said the deal is a highly unusual one, and that in reality what Intel is doing is taking out a mortgage on the new Fab 34 plant. “It’s reminiscent of Ford’s decision to mortgage its factories during the 2008 financial crisis, but the difference is that Intel is also getting money from various governments around the world too,” he said. “Its need for capital must be really dramatic, and there’s no doubt that Pat Gelsinger and his team will have to make some big decisions on where to allocate these new funds.”

Intel Chief Financial Officer David Zinsner said the deal gives the company more flexibility to execute its ambitious investment strategy, as part of its bid to create the world’s most resilient and sustainable semiconductor supply chain. “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,” he said.

According to Zinsner, the deal enables Intel to share its investment in Fab 34 with an “established financial partner on attractive terms while maintaining our strong investment-grade credit rating.”

Photo: Thomas Cloer/Flickr