Intel Corporation has roped in Brookfield Asset Management as a 49 percent partner in semiconductor joint venture that will invest $30 billion in manufacturing.
Intel’s Semiconductor Co-Investment Program (SCIP) aims to provide innovative ways to fund growth while creating financial flexibility to accelerate the company’s IDM 2.0 strategy, the semiconductor major said in a news statement.
In 2021, approximately 35 percent of Intel’s capital expenditures was spent on infrastructure.
Brookfield and Intel will jointly invest up to $30 billion in Intel’s announced manufacturing expansion at its Ocotillo campus in Chandler, Arizona. Intel, which will do 51 percent of the funding, will retain majority ownership and operating control of the two new chip factories in Chandler.
“This 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 U.S.,” said David Zinsner, Intel CFO. “Semiconductor manufacturing is among the most capital-intensive industries, and Intel’s bold IDM 2.0 strategy demands a unique funding approach.”
Sam Pollock, CEO of Brookfield Infrastructure, said: “By combining Brookfield’s access to large-scale capital with Intel’s industry leadership, we are furthering the advancement of leading semiconductor production capabilities.”
The structure is expected to provide a $15 billion cumulative benefit to Intel’s adjusted free cash flow over the next several years and is expected to be accretive to Intel’s earnings per share during the construction and ramp phase.
SCIP provides Intel the ability to replicate the co-investment model with other partners for other build-outs globally.
The co-investment plan indicates that Intel is betting on CHIPS and Science Act of 2022 that includes funding for $52 billion in incentives for the U.S. semiconductor industry.
Intel will be aiming to receive benefit from FABS Act, which will establish a semiconductor investment tax credit in the U.S.
Intel will also be gaining from the European Chips Act that has added 15 billion euros to an existing 30 billion euros in public investments to build new infrastructure.
