Under a joint partnership between Intel and Canada’s Brookfield Asset Management, the two companies will invest US$30 billion in chip factories in Arizona.
Brookfield’s infrastructure company is investing up to US$15 billion for a 49 per cent stake in the expansion project, but Intel will retain majority ownership and operational control of the two chip factories in Arizona that produce advanced chips.
While the transaction between the two companies is expected to close by the end of 2022, the investment marks an expansion of an agreement between Intel and Brookfield in February to explore financing options to help fund new Intel manufacturing sites.
The deal will offer both parties immense benefits. For Brookfield, investing in foundries represents a cash flow generating investment opportunity similar to that of private equity investments in infrastructure.
For Intel, the partnership will help the company maintain debt capacity for other priorities while maintaining operational control.
While the two companies did not disclose details of the deal, David Zinsner, Intel’s chief financial officer, told analysts that the interest rate was between 4.4 per cent and 8.5 per cent, and said it could mark the first of many similar financing structures the semiconductor industry could explore.
The sources for this piece include an article in Reuters.