Intel Corp. and Brookfield Asset Management Inc. have formed an unusual $30 billion funding agreement to support Intel’s ambitious manufacturing expansion plans. This has delivered a clear message that the global semiconductor market is poised for growth. Per the terms of the agreement, Intel will hold 51% of the venture while Brookfield Infrastructure Partners LP will contribute $15 billion, representing a 49% stake.
What’s in the deal?
The additional $30 billion investment comes on top of the $20 billion that Intel is already spending just up the street in Chandler, U.S. In addition, the collaboration couldn’t have come at a better moment. It comes only days after President Joe Biden signed the CHIPS and Science Act into law. The Act grants $52.7 billion in subsidies to the development and manufacturing of semiconductors in the United States.
The equity investment from Brookfield will be between US$500 million and US$750 million at most. The bulk of the company’s contribution has been debt-financed. Furthermore, the expenditure will be spread out over the many years it will take to develop the plants. The funds will come from operating cash flow and “capital recycling,” or selling off other investments to generate cash.
Intel’s growth plans have been in the works for some time, and now they’re coming to fruition. In March of 2021, the company announced plans to open two new production plants (or “fabs”). The plants are on its Ocotillo campus in Chandler, Arizona. Brookfield says that the Intel project will add to the company’s inventory of capital projects set to wrap up this year. Among these is Brazil’s Heartland Petrochemical Complex. In this project, work is currently underway on the second phase of construction of electricity transmission line.
This investment demonstrates Brookfield’s dedication to growth in the technology sector. Companies like Intel, according to Brookfield, can benefit from its “flexible and large-scale capital,”. Brookfield says that this can help tech companies offshore jobs in the digital economy. From two new operations in Arizona, Intel predicted in March that it will create more than 3,000 high-tech, high-wage Intel employees. This is in addition to more than 3,000 construction jobs.