Intel, Brookfield to Jointly Invest $30B for Expansion of Semiconductor Manufacturing Plants in Chandler, Arizona

by John Nelson

CHANDLER, ARIZ. — Tech giant Intel Corp. (NASDAQ: INTC) has signed a definitive agreement with the infrastructure affiliate of Brookfield Asset Management (NYSE: BAM), a global alternative asset management firm, to fund the expansion of its Ocotillo semiconductor manufacturing campus in Chandler.

Under terms of the agreement, the companies will jointly invest up to $30 billion in the buildout, with Intel providing 51 percent and Brookfield Infrastructure Partners providing 49 percent of the total project costs. Dubbed the “Semiconductor Co-Investment Program,” the partnership will create two new production facilities on the 700-acre campus, which Intel established in 1980.

Santa Clara, Calif-based Intel will retain majority ownership and operating control of the two new chip factories. No construction details or timeline were disclosed.

Semiconductors, or chips, are an essential element of most all electronic and computing devices, including electric vehicles, phones, tablets, TVs, home appliances, solar panels and gaming consoles.

“Semiconductor manufacturing is among the most capital-intensive industries in the world,” says David Zinsner, Intel’s chief financial officer. “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.”

In addition to the influx of private capital via its Brookfield partnership, Intel has been working with the federal government to advance incentives. President Joe Biden recently signed the CHIPS and Science Act of 2022 into law, which includes funding for $52 billion in incentives for the U.S. semiconductor industry. There are similar government incentives in European countries that Intel is monitoring.

Additionally, the U.S. Congress is currently considering the FABS (Facilitating American-Built Semiconductors) Act, which would establish a semiconductor investment tax credit in the United States.

Intel says the co-investment partnership with Brookfield could represent a blueprint for partnerships with other capital partners for future buildouts globally. The firm says the combination of private capital and government incentives is necessary for the advancement of semiconductors.

Lazard Frères & Co. LLC served as financial advisor to Intel, while Skadden, Arps, Slate, Meagher & Flom LLP served as legal counsel. Kirkland & Ellis LLP served as legal counsel to Brookfield. Intel’s transaction with Brookfield is expected to close by the end of 2022, subject to customary closing conditions.

Intel Corp. generated $79 billion in revenue and invested about $15.2 billion in research and development in 2021. The firm employed approximately 121,100 people globally at the end of 2021, a 9.5 percent increase from year-end 2020.

Intel’s stock price closed at $33.84 per share on Monday, Aug. 22, down 36.4 percent from $53.23 a year ago.

Brookfield Asset Management is a leading global alternative asset manager with approximately $750 billion of assets under management across real estate, infrastructure, renewable power and transition, private equity and credit. The New York City-based firm’s subsidiaries include Brookfield Property Partners, Brookfield Office Properties, Brookfield Infrastructure Partners, Brookfield Renewable Partners, Brookfield Business Partners and Brookfield Reinsurance Partners.

Brookfield is traded on both the New York Stock Exchange and Toronto Stock Exchange. The firm’s NYSE stock price closed at $51.02 per share on Monday, down 9.8 percent from $56 a year ago.

— John Nelson

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