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Apollo and Intel enter talks to loan $11 billion to Irish chip factory

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US semiconductor giant Intel is looking to finance an $11 billion semiconductor manufacturing plant in Ireland, as large companies increasingly turn to private capital groups rather than banks to finance expansion projects. has entered into exclusive negotiations with Apollo Global.

Intel is funding an aggressive expansion of its semiconductor manufacturing facilities as it moves its supply chain from Asia to Western Europe and North America and modernizes its chip manufacturing production facilities to keep up with rapid advances in artificial intelligence technology. We are currently negotiating for procurement.

The Santa Clara-based semiconductor manufacturing pioneer said it had secured financing for a new chip manufacturing facility in Ireland before entering into exclusive talks with Apollo, according to three people briefed on the matter. It is said that discussions were held with other private capital groups (KKR and Stone Peak) regarding the offer.

Apollo and Intel declined to comment. The Wall Street Journal previously reported on exclusive negotiations between Apollo and Intel.

Intel is in the midst of a multi-year plan to transform its business, with Chief Executive Officer Pat Gelsinger overhauling its own manufacturing operations to make chips for competitors. The company is trying to regain leadership in chip design from rivals TSMC and Samsung.

In March, the U.S. government announced it would provide approximately $20 billion in direct funding and loans to Intel under the Chip Act of 2022 to increase its ability to manufacture chips at new factories in Arizona, New Mexico, Ohio, and Oregon. did.

Gelsinger named Intel as a domestic champion that could meaningfully shift chip production from Asia to the United States and Europe in the coming years amid tensions with China. The company is also building a new factory in Germany with government aid.

Intel's manufacturing business suffered an operating loss of $7 billion in 2023, significantly larger than the previous year. Intel's lackluster sales outlook is weighing on the stock, with Intel not expecting its manufacturing business to start breaking even until 2027.

Intel has already partnered with a major private capital group to finance the construction of new semiconductor manufacturing plants. In 2022, Intel sold up to a 49% stake in a chip manufacturing plant it is building in Arizona to Canada's Brookfield Infrastructure Partners for $15 billion to fund a $30 billion project.

Apollo has emerged as a leading lender of investment-grade rated loans, which are more complex than corporate bonds and sold into the broader debt market.

Last year, Apollo originated large investment-grade loans for companies such as Air France/KLM and German real estate developer Vonovia, suggesting it is rapidly expanding its capacity for similar arrangements. ing.

Apollo told shareholders this month that it expects to generate more than $200 billion in annual debt over the next few years, driven by loans to investment-grade companies such as Intel. Apollo told shareholders that the loan will focus on building new infrastructure, including digital communications networks, data centers, renewable energy facilities and semiconductors.

Apollo's financing is backed by its insurance business, which has more than $500 billion in assets and is generally able to hold these obligations to maturity.

The Irish government relies heavily on Corporate tax revenue Participants from global tech and pharmaceutical companies had no immediate comment on the meeting. Since 1989, Intel has invested more than $34 billion to expand its operations in Ireland by converting a former stud farm in Leixlip, County Kildare into a chip manufacturing factory.

Summarize this content to 100 words Unlock Editor's Digest for freeFT editor Roula Khalaf has chosen her favorite stories in this weekly newsletter.US semiconductor giant Intel is looking to finance an $11 billion semiconductor manufacturing plant in Ireland, as large companies increasingly turn to private capital groups rather than banks to finance expansion projects. has entered into exclusive negotiations with Apollo Global.Intel is funding an aggressive expansion of its semiconductor manufacturing facilities as it moves its supply chain from Asia to Western Europe and North America and modernizes its chip manufacturing production facilities to keep up with rapid advances in artificial intelligence technology. We are currently negotiating for procurement.The Santa Clara-based semiconductor manufacturing pioneer said it had secured financing for a new chip manufacturing facility in Ireland before entering into exclusive talks with Apollo, according to three people briefed on the matter. It is said that discussions were held with other private capital groups (KKR and Stone Peak) regarding the offer.Apollo and Intel declined to comment. The Wall Street Journal previously reported on exclusive negotiations between Apollo and Intel.Intel is in the midst of a multi-year plan to transform its business, with Chief Executive Officer Pat Gelsinger overhauling its own manufacturing operations to make chips for competitors. The company is trying to regain leadership in chip design from rivals TSMC and Samsung.In March, the U.S. government announced it would provide approximately $20 billion in direct funding and loans to Intel under the Chip Act of 2022 to increase its ability to manufacture chips at new factories in Arizona, New Mexico, Ohio, and Oregon. did. Gelsinger named Intel as a domestic champion that could meaningfully shift chip production from Asia to the United States and Europe in the coming years amid tensions with China. The company is also building a new factory in Germany with government aid.Intel's manufacturing business suffered an operating loss of $7 billion in 2023, significantly larger than the previous year. Intel's lackluster sales outlook is weighing on the stock, with Intel not expecting its manufacturing business to start breaking even until 2027.Intel has already partnered with a major private capital group to finance the construction of new semiconductor manufacturing plants. In 2022, Intel sold up to a 49% stake in a chip manufacturing plant it is building in Arizona to Canada's Brookfield Infrastructure Partners for $15 billion to fund a $30 billion project.Apollo has emerged as a leading lender of investment-grade rated loans, which are more complex than corporate bonds and sold into the broader debt market. Last year, Apollo originated large investment-grade loans for companies such as Air France/KLM and German real estate developer Vonovia, suggesting it is rapidly expanding its capacity for similar arrangements. ing. Apollo told shareholders this month that it expects to generate more than $200 billion in annual debt over the next few years, driven by loans to investment-grade companies such as Intel. Apollo told shareholders that the loan will focus on building new infrastructure, including digital communications networks, data centers, renewable energy facilities and semiconductors. Apollo's financing is backed by its insurance business, which has more than $500 billion in assets and is generally able to hold these obligations to maturity.The Irish government relies heavily on Corporate tax revenue Participants from global tech and pharmaceutical companies had no immediate comment on the meeting. Since 1989, Intel has invested more than $34 billion to expand its operations in Ireland by converting a former stud farm in Leixlip, County Kildare into a chip manufacturing factory.
https://www.ft.com/content/814b07ed-d557-4ae7-bef2-1bd2a0dc5763 Apollo and Intel enter talks to loan $11 billion to Irish chip factory

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