The capital and technology demands of remaining a world leader in the semiconductor business are becoming extreme. Just how extreme was evident from two announcements at Intel this week. They show how profoundly the company is adapting its traditional way of doing business as it tries to regain its lost technology edge and ensure the US is home to at least one world-leading chip manufacturer.
The first announcement was that it is selling a 49 per cent stake in two new manufacturing plants under development in Arizona to private equity firm Brookfield. This is an entirely new way to fund chip fabrication plants (fabs) as the cost of building the most advanced facilities soars. The Brookfield deal covers the first $30bn invested in Arizona, while Intel has put the long-term investment in its new fabs like the one it is building in Germany at more than $100bn each.
The deal is a byproduct of Intel’s decision to stand its ground on chip manufacturing, even as it struggles to regain the lead it has lost to TSMC and Samsung in the latest process technology.