Intel turns to private equity to help pay for new factories

Intel is turning to private equity to bankroll its much-hyped chip foundry expansion. The x86 giant said this week it and Brookfield Asset Management have agreed to scrape together $30 billion to build two fabs on the chipmaker's Arizona campus. We're told to expect more of these sorts of partnerships, which will be organized …

[elsergiovolador]

Climate

Given the climate crisis, the world does not need more Intel's inefficient and power hungry processors.

They want to build fabs, fine, but what's the point if they don't have any viable product to manufacture?

Let's face it. x86 architecture is dead.

There is a great shortage of less technologically advanced components, like microcontrollers, I/O interface ICs, CPLDs, FPGAs. You even have hard time sourcing passive components like capacitors.

Why Intel is not focusing on that sector?

[Yet Another Anonymous coward]

Re: Climate

>Why Intel is not focusing on that sector?

For pretty much the same reason that Mclaren isn't concentrating on the vital 3rd world buffalo cart market

[elsergiovolador]

Re: Climate

They dabbled in flip flops market though

[Snowy]

Re: Climate

They also want to make other people processors, they are looking to expand their contract chip production.

[Anonymous Coward]

Water for chip plants

I haven’t kept up on chip manufacturing techniques but several years ago they used massive amounts of water every day (100k gallons? I vaguely recall).

If that’s the case, setting up a chip plant in the desert or any part of the drought-riden southwest is irresponsible.

States that still have heavy rainfall would make better sites.

If local AZ governments or the AZ state government has guaranteed a massive water supply for chip plants ahead of residential use, that’d be par for the course.

But maybe chip plants don’t require a high volume of water anymore.

Maybe investigate that.

[elsergiovolador]

Re: Water for chip plants

I see that your post has irrigated someone...

[Lordrobot]

GOV and HEDGE FUNDS.... this RAILROAD Stock CAN'T MISS!

This gets more pathetic with each passing day... NEWSFLASH... NO Competitor of INTEL is ever going to bring their chip designs to INTEL for fabrication. It is projected that US FAB chips will cost 3X more than Chips made in Taiwan and Korea.

[DS999]

Intel selling tax breaks?

Fabs throw off massive tax benefits from depreciation. I wonder if Intel doesn't think they will be making enough profit to fully take advantage of the tax deductions from depreciation, and by partnering they are effectively "selling" 49% of those tax benefits? A hedge fund presumably can use all the tax deductions it can get.

[Yet Another Anonymous coward]

Re: Intel selling tax breaks?

It's a cost if Intel own a fab,. But for an asset manager like Brookfield it's a profit center, they're charging rent.

Of course they both have a bunch of accountants to prove to the IRS they are losing money while proving to the investors they are wildly profitable

[steamnut]

A risk too far?

With the recession causing a slow down in chip purchases could this be a risky venture now? Spending all that money and taking on a debt for a plant that will not be profitable for many years seems like betting the farm to maintain industry dominance. If it backfires then it could put them back many years. Maybe then they will ditch that horrible and over extended X86 architecture.

[Bitsminer]

Brookfield

In Canada, Brookfield is well known amongst investors, mutual funds, and the like. They have several related companies all listed in Toronto and New York exchanges.

They are cash machines. They make a tonne of money every quarter. They are reliable for dividends and make people like me happy to have them for retirement funds.

But if Gelsinger ever needed instruction on the discipline of running a business, he will get it from Brookfield. Intel may not know who they just bedded.

[Hull]

If you owe the bank $100 ...

... that's your problem. If you owe the bank $100 million, that's the bank's problem.

-- J Paul Getty