Intel to buy back Apollo stake in Ireland factory for $14.2 billion
Posted by imaginary_num6er@reddit | hardware | View on Reddit | 19 comments
Posted by imaginary_num6er@reddit | hardware | View on Reddit | 19 comments
Maimakterion@reddit
Basically took a 11% APR loan from Apollo
Unlucky-Context@reddit
This is not a crazy rate for Intel. They had a huge balance sheet issue 2 years ago, and they couldn't just lever up on cheaper loans. I don't think this is terrible financial engineering as people are making it out to be.
Intel is also potentially on the hook for underperformance penalties on the fab production side, I think, so buying them back out here at a possible more expensive rate is not crazy. Apollo gets a clean exit, Intel gets a discount on penalties and owns the fab again, everyone is happier.
LiteratureMindless71@reddit
We? Why do I feel like this will end up alin a single person or groups pocket?
hardware2win@reddit
26% more in 2 years? Quite a lot
goldcakes@reddit
They were having quite severe cash flow and balance sheet issues. That’s not too high for basically a loan (immediate cash injection) where Intel essentially ended up getting and exercising a call option.
Honestly this seems like a “sweetheart” deal by Apollo standards. They’re usually bigger vultures than this.
fastheadcrab@reddit
Probably because they are about to get fucked by many other private loans imploding soon
Nice_Classroom_6459@reddit
So we gave Intel $10B so they could buy back the assets they sold to private equity...in Ireland.
Do you feel great yet, America?
ryanvsrobots@reddit
This buyback has nothing to do with the chips act.
We gave intel $7.86 billion to help build domestic fabs. We also own 10% of Intel now which is worth $25 billion.
ElementII5@reddit
Wasted money though? Doesn't add anything to production capacity.
crab_quiche@reddit
I don’t think selling your production facilities and perpetually paying to use them has ever worked in the long run for any company.
Exist50@reddit
Worked for AMD.
Ecstatic_Secretary21@reddit
Now they earn the full profits from manufacturing. I believe previous agreement with Apollo is to split the profit as long the product comes from Ireland fab.
Geddagod@reddit
It's nice cuz the ireland fab should be primarily Intel 3/4 for DC skus, so those wafers are high margin too.
bizude@reddit
Seems like Intel's getting confident now that Leary is on the way out.
Geddagod@reddit
Who?
iDontSeedMyTorrents@reddit
Think they mean Yeary, as in Frank Yeary, Intel's outgoing board chair.
Geddagod@reddit
Not sure why he thinks that this move is then enabled by Yeary retiring then.
If the rumors alleging that Yeary disliked Pat's expansion plans and heavy spending on future fabs are accurate, than what Intel did right here falls right in line of what Yeary would have liked.
Rather than spend the money on building out more capacity and new fabs, Intel is trying to further improve their financials by buying back shares of their existing fab and benefitting from taking more profits there.
MinutePair7585@reddit
Intel has got to be a study in corporate mismanagement. Seems like every big strategic decision they make ends up being the wrong one.
imaginary_num6er@reddit (OP)