Intel unveils semiconductor co-investment program

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www.smart2zero.com, Aug. 24, 2022 – 

Intel Corporation has announced a first-of-its-kind Semiconductor Co-Investment Program (SCIP) that introduces a new funding model to the capital-intensive semiconductor industry. As part of its program, the company has signed a definitive agreement with the infrastructure affiliate of Brookfield Asset Management, one of the largest global alternative asset managers, which will provide Intel with a new, expanded pool of capital for manufacturing build-outs.

SCIP, says the company, is a key element of its Smart Capital approach, which aims to provide innovative ways to fund growth while creating further financial flexibility to accelerate the company's IDM 2.0 strategy. The company's agreement with Brookfield follows the two companies' memorandum of understanding announced in February 2022, under which the companies will jointly invest up to $30 billion in Intel's previously announced manufacturing expansion at its Ocotillo campus in Chandler, Arizona, with Intel funding 51% and Brookfield funding 49% of the total project cost.

Intel will retain majority ownership and operating control of the two new leading-edge chip factories in Chandler, which will support long-term demand for Intel's products and provide capacity for Intel Foundry Services (IFS) customers.

"This landmark 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.," says David Zinsner, Intel CFO. "Semiconductor manufacturing is among the most capital-intensive industries in the world, and Intel's bold IDM 2.0 strategy demands a unique funding approach. Our agreement with Brookfield is a first for our industry, and we expect it will allow us to increase flexibility while maintaining capacity on our balance sheet to create a more distributed and resilient supply chain."

Sam Pollock, CEO of Brookfield Infrastructure, adds, "By combining Brookfield's access to large-scale capital with Intel's industry leadership, we are furthering the advancement of leading semiconductor production capabilities. Leveraging our partnership experience in other industries, we are pleased to come together with Intel in this important investment that will form part of the long-term digital backbone of the global economy."

SCIP is an important component of Intel's overall Smart Capital approach, which is designed to allow the company to adjust quickly to opportunities in the market, while managing its margin structure and capital spending. Through SCIP, Intel is accessing strategically aligned capital to increase its flexibility and help efficiently accelerate and scale its manufacturing build-outs. This type of co-investment also shows how private capital is unlocked and becomes a force multiplier for government incentives for semiconductor manufacturing expansion.

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