Intel to buy back Apollo’s stake in Irish fabric for $14.2B

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

The company intends to finance the project through 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 a joint venture unit established with Apollo Global Management. The investment firm bought a 49% stake in the joint venture for $11.2 billion.

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

“Our 2024 agreement was the right structure at the right time and gave Intel meaningful flexibility, enabling us to accelerate critical initiatives,” said Intel CEO David Zinsner. “Today, we have a strong balance sheet, improved financial performance and an improved business strategy.”

Fab 34 makes some of the CPUs in Intel’s business-oriented Xeon 6 product family. The chip series includes twelve processors designed to power data centers, workstations and edge computing devices. The most capable CPU in the list includes 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 intelligence machine. The system includes two CPUs and 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 various tasks in AI clusters. They use orchestration tools, applications that decide which GPU should perform a subset of the tasks involved in training an AI model. CPUs also help prepare the data consumed by GPUs and coordinate network traffic flowing between them.

Intel’s decision to sharpen its focus on the CPU market follows the introduction of high-end products from competitors. Last month, Nvidia first released server CPU called Vera that it claims can provide 50% more performance than competing products. Around the same time, Arm Holdings plc introduced a 136-core CPU optimized for AI clusters.

The data center segment is not the only focus of Fab 34. The plant also makes other chips in Intel’s Core Ultra processor series, which are mainly aimed at laptops.

Fab 34 makes CPUs using Intel 4 and Intel 3 processes, based on four nanometer and three nanometer technologies, respectively. The chip maker used some of the proceeds from its 2024 deal with Apollo to finance the development of the nodes. Work also supported the release of the new Intel 18A process. The technology, which began 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 a stake in Apollo’s Fab 34. The company expects the deal to be accretive to its earnings per share.

Photo by Fab 34: Intel