Investors see a strong future for America’s chip manufacturing capabilities.
Key details
Intel Corp. is partnering with Canada-based Brookfield Asset Management to help fund new chip-making facilities in Chandler, Arizona. The $30 billion partnership will be 51% controlled by Intel, which will fund and maintain a controlling interest in the project. The deal is set to close by the end of 2022, according to The Wall Street Journal.
The move will make Intel a leading manufacturer in global semiconductor production and above its competition in Taiwan and South Korea, which have also been investing hundreds of billions of dollars into expansion.
The partnership with Brookfield Asset Management will help them address the significant short-term capital needs that their expansion requires. Brookfield will own 49% of the equity and revenue that comes out of the facilities,
Why it’s important
Brookfield’s interest signals its confidence in the future of U.S. semiconductor manufacturing.
Intel and its investors see long-term growth in the semiconductor industry in spite of recent declining revenues.
As we reported last week, declining semiconductor sales in the past quarter hurt several tech manufacturers. An oversupply in chips has decreased growth from 26% to 7.4% in the past year. Nvidia released a preliminary press release earlier this month saying revenue fell well below their second-quarter outlook. Intel reported a 22% decrease in second-quarter sales, the largest revenue drop in decades.
Intel CEO Pat Gelsinger expects semiconductor sales to double by the end of the decade.
Backing up a bit
President Joe Biden signed the CHIPS and Science Act on August 9, which sets aside $52.7 billion for semiconductor research and development. The bill will help divert chip production away from Taiwan and China by strengthening American manufacturing and national security interests.
“Intel is counting on government help to defray some costs. Political leaders in both the U.S. and Europe have signaled eagerness to build up chip-making locally and counter the industry’s shift toward Asia, where manufacturing has typically been cheaper,” according to The Wall Street Journal.
Intel announced an expansion with two new facilities last year, as part of the company’s commitment to investing in US chip production. It broke ground on construction on September 24, 2021, marking the start of the largest private construction investment in Arizona history.
“As the only U.S.-based leading-edge chipmaker, we are committed to building on this long-term investment and helping the United States regain semiconductor leadership,” said Gelsinger.
The new Intel facility is expected to be operational in 2024, and is expected to create 3,000 tech jobs, 3,000 construction jobs, and attract 15,000 indirect jobs in the community.
