Intel to repurchase Apollo’s stake in Ireland fab for $14.2B – News

Two years after selling a stake in its Irish chip manufacturing facility, Intel Corp. today announced plans to buy back the shares for $14.2 billion.

The company intends to finance the transaction with a combination of cash and stock.

Intel operates a plant called Fab 34 in Ireland that makes central processing units. In June 2024, the company moved the facility under the wing of a joint venture established with Apollo Global Management. The investment firm bought 49% stake in the joint venture for $11.2 billion.

Today’s deal represents a $3 billion return for Apollo. Intel says that temporarily offloading the Fab 34 stake accelerated its growth plans by providing it with access to needed capital. In 2024, the year the deal was announced, the company’s market capitalization dropped more than 50%.

“Our 2024 agreement was the right structure at the right time and provided Intel with meaningful flexibility, enabling us to accelerate critical initiatives,” said Intel Chief Executive Officer David Zinsner. “Today, we have a stronger balance sheet, improved financial discipline and an evolved business strategy.”

Fab 34 makes some of the CPUs in Intel’s enterprise-focused Xeon 6 product family. The chip series includes several dozen processors designed to power data centers, workstations and edge computing devices. The most capable CPU in the lineup features 128 cores with a maximum frequency of 3.9 gigahertz.

Last month, Nvidia Corp. revealed plans to ship another Xeon 6 chip called the 6776P as part of its DGX Rubin NVL8 artificial intelligence appliance. The system combines two CPUs with eight Rubin graphics processing units. The DGX Rubin NVL8 can provide 400 petaflops of performance when processing data stored in Nvidia’s NVFP4 format.

CPUs perform a wide range of tasks in AI clusters. They run orchestration tools, the applications that determine which GPU should perform what subset of the tasks involved in training an AI model. CPUs also help prepare the data that GPUs ingest and coordinate the network traffic that flows between them.

Intel’s decision to sharpen its focus on the CPU market follows high-profile product launches from rivals. Last month, Nvidia debuted a server CPU called Vera that it says can provide 50% more performance than rival products. Around the same time, Arm Holdings plc introduced a 136-core CPU optimized for AI clusters.

The data center segment isn’t the only focus of Fab 34. The plant also makes some of the chips in Intel’s Core Ultra processor series, which is mainly geared towards laptops.

Fab 34 makes CPUs using the Intel 4 and Intel 3 processes, which are based  on four-nanometer and three-nanometer technology, respectively. The chipmaker used some of the proceeds from its 2024 deal with Apollo to finance the development of the nodes. The transaction also supported the rollout of the newer Intel 18A process. The technology, which went into mass production last year, offers up to 15% better performance per watt than Intel 3.

Intel will issue about $6.5 billion in debt to finance the repurchase of Apollo’s Fab 34 stake. The company expects the transaction to be accretive to its earnings per share.

Photo of Fab 34: Intel