Intel Corp. reached an agreement with Brookfield Asset Management for what it is calling a first-of-its-kind funding deal to help pay for its massive U.S. semiconductor manufacturing plans.
The companies plan to jointly invest $30 billion to expand Intel's semiconductor production facilities in Arizona. Toronto-based Brookfield will fund 49% of the project while Intel will pay for the remaining 51% and retain operational control, according to a statement from the companies on Tuesday. Intel and Brookfield’s infrastructure division plan to evenly share revenue generated by the plants.
Intel said in March 2021 it planned to expand its Ocotillo campus in Chandler, Arizona, with two new chip factories. Earlier this month, President Biden signed legislation, called the CHIPS Act, to provide $50 billion in financial assistance to help boost domestic semiconductor chip production.
Semiconductor manufacturing is among the most capital-intensive industries in the world, said David Zinsner, chief financial officer of Intel, in the statement. The funding deal with Brookfield is expected to be the first of other agreements Intel makes to pay for its chip manufacturing plant expansions.
"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," Zinsner said in the statement.
When Intel announced its Arizona expansion last year, it set the value at $20 billion, but that figure has since climbed to $30 billion because of inflation, the company said. Intel is separately planning to develop new chip plants in Lorain, Ohio, valued at up to $100 billion. The company’s Ohio plans would also get a boost from the CHIPS Act.
The deal with Brookfield is expected to close by the end of the year. Brookfield has more than $750 billion under management, including real estate assets worldwide.
“By combining Brookfield's access to large-scale capital with Intel’s industry leadership, we are furthering the advancement of leading semiconductor production capabilities,” Brookfield Infrastructure CEO Sam Pollock said in the statement.
For the Record
Lazard Frères & Co. served as financial adviser and Skadden, Arps, Slate, Meagher & Flom served as legal counsel to Intel. Kirkland & Ellis served as legal counsel to Brookfield.