Intel to Unload $15 Billion in Shares Amid Market Rally
Intel said on Monday it plans to raise $15 billion through a share sale to fund its costly build-out of its chip contract manufacturing business, cashing in on a stock surge fueled by its turnaround efforts.
The move comes as Intel seeks to challenge industry leaders such as TSMC in contract chip manufacturing.
Intel's Ambitious Expansion Plans
Intel's shares fell more than 4% on Monday, but the stock has nearly tripled so far this year, outperforming rivals AMD and Nvidia and the Philadelphia Semiconductor Index's nearly 75% rise. Several analysts have said Intel's surging share price has increased the chances of an equity raise to help fund its expansion plans.
Russ Mould, investment director at AJ Bell, said, "As a capital-intensive business that went a long way to wrecking its own balance sheet and prospects by focusing on financial engineering rather than physical engineering, courtesy of $82 billion of share buybacks in the 2010s, it makes perfect sense for Intel to raise money, especially after a five-fold increase in the stock price since last August."
Intel's Shift to AI-Powered Demand
The shift toward AI agents has powered demand for central processing units beyond Intel's manufacturing capacity, prompting the chipmaker to raise its capital expenditure forecast for this year from $18 billion to $20 billion in July. It also committed to high-volume production of chips using its 14A manufacturing process in 2028, after previously warning the technology could be shelved without a major external customer.
Its foundry unit has won Tesla as a 14A customer and optimism for another marquee client grew after U.S. President Donald Trump said Apple would make processors with Intel, though neither company confirmed it.
Intel's Share Sale Details
Intel plans to give underwriters a 30-day option to buy up to $2.25 billion worth of additional shares at the offer price, minus discounts. JPMorgan Securities, Goldman Sachs, Morgan Stanley, and Citigroup Global Markets are acting as joint book-running managers. Bloomberg News, citing people familiar with the matter, reported that Intel plans to increase the size of its share sale to about $20 billion and could price the offering at $95 a share or higher, a discount of about 2.6% to the stock's Monday close of $97.52.
Market Reaction
Investor demand has exceeded $100 billion and the deal could top $20 billion if the over-allotment option is exercised. However, Reuters could not immediately verify the report, and Intel could not be reached for comment outside regular business hours.
Intel's decision to raise $15 billion through a share sale marks a significant milestone in its expansion plans. The move is expected to help the company fund its costly build-out of its chip contract manufacturing business and challenge industry leaders such as TSMC. As the technology landscape continues to evolve, it will be interesting to see how Intel's share sale unfolds and what implications it may have for the industry.
Source: Joy Online
