Intel is paying through the nose to take back control of its Irish chip plant.
Intel will spend more than $14bn to regain full ownership of its Fab 34 semiconductor factory in Ireland from Apollo, just two years after flogging a stake to patch up its finances.
Wednesday’s deal buys back Apollo’s stake in the plant, which Chipzilla sold for $11.2bn, and it lands after last August’s agreement to hand a 10 per cent stake to the US government.
Since then, Chipzilla has attracted multibillion-dollar investments from SoftBank and Nvidia, giving the chipmaker some breathing room.
Intel finance chief David Zinsner said the 2024 agreement provided “meaningful flexibility… Today, we have a stronger balance sheet, improved financial discipline and an evolved business strategy.”
Shares in Chipzilla jumped eight per cent in early trading after the buyback was announced.
When Apollo first turned up with its cheque book, a run of financial and technical setbacks had left the future of the last remaining US maker of cutting-edge chips looking shaky.
Since the US government took a stake, Chipzilla’s stock has roughly doubled, which tells you how low the bar was.
Its prospects have been helped by rising demand for its central processing units in “agentic” AI workloads, a patch Nvidia’s graphics processing units used to call home.
For Apollo, the exit should mint a tidy return on the biggest financing deal in the investment group’s history.
People briefed on the matter said Apollo will earn a low to mid-teens return, which is the sort of number that keeps private capital grinning.
Apollo has made a habit of lending to giants such as AB InBev, Air France-KLM and EDF on fiddly financing structures, often leaning on its insurer Athene for cheaper money.
Athene was a large investor in the Chipzilla joint venture, according to securities filings, which is a polite way of saying the paperwork matters more than the factories.
Apollo often sets up joint ventures to fund massive capital spending, keeping projects off a company’s balance sheet and making the pain look like it belongs to someone else.
In this case, the financing arrived when Chipzilla needed cash for modernised fabrication plants, and it will now raise more than $6bn in new debt to buy back Apollo’s Irish stake.
Apollo partner Jamshid Ehsani said: “The deal came at an important stage in Intel’s ‘advanced manufacturing roadmap, where our long-term strategic capital played a meaningful role in accelerating the production of next-generation chip technology.”
