As Intel saw its market cap slide below that of Starbucks, enterprise shoppers were buying bargain AMD chips by the pallet as they also assumed Uncle Sam wouldn’t let an integral part die. Just last week Intel apparently finalized an $8.5 billion round of fresh financing.
Intel Secures New Funding
Intel got authorized on September 16 for $3.5 billion in direct funding under the Department of Defense’s Secure Enclave program that is supposed to jumpstart leading-edge semiconductor manufacturing on-shore for defense purposes. This is on top of the $8.5 billion in grants and $11 billion in loans that the CHIPS Act would anticipate.
However, the most significant news came out of Apollo Global, a leading asset management firm with close to $350 billion in assets under administration, which Bloomberg reported is exploring an “equity-like” investment worth as much as $5 billion in Intel, representing its vote of confidence over the tech giant’s recent restructuring efforts.
Intel dissolves its chip manufacturing division into a new subsidiary, Intel says it is separating the design and manufacturing work of its products to lure more customers.
Intel has stopped construction at factories in Poland and Germany for two years, to help save $10 billion by automating/managing facilities; the company will also slow down the creation of a new advanced packaging facility in Malaysia to align output with likely market conditions. The company has already executed about half of its planned layoffs, targeting approximately 15,000 employees by the end of 2024. Additionally, Intel aims to reduce or divest about two-thirds of its global real estate by year-end and plans to publicly list its FPGA division, Altera.
Broadcom and Amazon are currently the primary customers for Intel’s upcoming 18A process, which aligns with TSMC’s 2nm process and is set to enter commercial production in 2025. Recently, Qualcomm has reportedly approached Intel with a takeover offer. While discussions are still preliminary, any potential deal could have significant implications for the industry.
However, with each new round of funding Intel secures, the likelihood of a Qualcomm takeover diminishes, as Qualcomm’s cash reserves are limited and Intel’s 15 fabs are valued at around $150 billion. The fact that Intel’s stock is currently trading below this valuation makes it a more attractive target for Qualcomm, but additional funding rounds may provide Intel with more opportunities to implement comprehensive changes.
FAQs
What recent funding has Intel secured?
Intel has reportedly secured $8.5 billion in new funding, including $3.5 billion from the Department of Defense’s Secure Enclave program.
Is Qualcomm considering a takeover of Intel?
Yes, Qualcomm has reportedly approached Intel with a preliminary takeover offer, although discussions are still exploratory.
