Intel (INTC.O), opens new tab said it would spend $14.2 billion to buy back the 49% stake it had sold to Apollo Global Management in its Ireland manufacturing facility, taking full ownership of the plant as its finances improve and AI drives demand for its processors.
Shares of the chipmaker rose more than 10% on Wednesday.
Apollo (APO.N), opens new tabhad paid $11.2 billion, opens new tab in 2024 to buy the stake in a joint venture for the plant in the town of Leixlip outside Dublin, giving the then-struggling Intel a cash infusion to fund its manufacturing expansion in Europe and the U.S.
Intel has since changed CEOs, with current top boss Lip-Bu Tan pursuing an aggressive restructuring to repair the company’s finances, including job cuts and asset sales. The chipmaker has also received billions of dollars in investments from Nvidia and the U.S. government, which is now its biggest shareholder.
After sitting out the artificial intelligence boom for nearly three years, demand is also rising for its central processors used in data centers due to inference, the process by which AI tools such as ChatGPT respond to user queries.
“Today, we have a stronger balance sheet, improved financial discipline and an evolved business strategy,” Intel Chief Financial Officer David Zinsner said on Wednesday.
Intel said the stake buyback would be funded with cash on hand and about $6.5 billion of new debt. It expects the deal to boost profit and strengthen its credit profile from 2027.
The Ireland plant, known as Fab 34, makes chips using Intel 4 and Intel 3 process technologies including Core Ultra processors for PCs and Xeon processors for servers.
It was Intel’s first high-volume manufacturing site for the Intel 4 manufacturing process that uses extreme ultraviolet lithography machines.
Intel is now focusing on its 18A manufacturing technology, which Zinsner said earlier this month may be offered to external customers after being largely relegated for internal use last year.
