Intel signs ‘first of its kind’ joint investment agreement with Canadian asset manager

Intel has entered into a co-investment agreement of up to $30 billion with Canadian investment firm Brookfield Asset Management to fund the company’s semiconductor expansion efforts in Arizona.

In a press release, the semiconductor giant said the deal will increase its pool of capital for manufacturing buildouts and accelerate its IDM 2.0 strategy. Under the agreement, Intel will provide his 51% of the funding for the Ocotillo campus in Chandler, Arizona, while Brookfield will provide his remaining 49%. More importantly, the deal sets a precedent for Intel to replicate the model with future partners.

The transaction with Brookfield is expected to close by the end of 2022. Over the next three years, Intel expects the deal to bring his US$15 billion cumulative benefit to Intel’s adjusted free cash flow.

The deal, which the company calls the Semiconductor Co-Investment Program (SCIP), is a first for Intel. The company describes this method as a key component of its smart capital approach to raising capital through multiple channels.

But the smart capital approach is about more than just building partnerships. That blueprint also includes increasing investment in capacity, obtaining government incentives, enhancing new Intel Foundry services, and working with external foundries.

Revival of domestic production

The share of modern semiconductor production in the United States has fallen from 37% in 1990 to just 12% in 2022, according to the Semiconductor Industry Association. As tensions between world powers rise and chip shortages continue to hit the industry, securing the semiconductor supply chain has become a priority for all nations.

In response to this urgency, the US government announced the CHIPS and Science Act in 2022, pledging US$52 billion in subsidies to the semiconductor industry. Following the CHIPS Act, the government also introduced the US Acceleration of Manufacturing Semiconductors Act (FABS) Act, which proposes a 25% semiconductor investment tax credit, including investments in tools required for manufacturing. The name also refers to a semiconductor manufacturing plant commonly called a fab.

Intel itself has also made a lot of investments. In January, the company announced plans to build its US$100 billion fab, his complex of eight chip factories in Albany, Ohio, the largest private sector in the state to date. said it was an investment in In addition, the company has committed US$89 billion to build semiconductor production and research facilities in Germany, France, Ireland, Poland and Spain.