Intel announced Monday an underwritten public offering of common stock to raise $15 billion, as the chipmaker seeks to fund manufacturing capacity expansion and growth in artificial intelligence.
The company said the proceeds will be used for general corporate purposes, which may include capital expenditures and working capital, and pointed to "physical AI, purpose-built silicon, advanced packaging and external wafers" as significant growth opportunities, according to the statement reported by Yahoo Finance.
JPMorgan Securities, Goldman Sachs, Morgan Stanley and Citigroup Global Markets are acting as joint book-running managers. The underwriters have a 30-day option to purchase up to an additional $2.25 billion in shares, which could bring the total raised to as much as $17.25 billion before expenses, the company said.
Intel shares have nearly tripled this year, reaching $101.65, according to Bloomberg data cited by Yahoo Finance. The stock fell more than 3 percent in premarket trading on Monday, reflecting investor concern about dilution from the new offering, according to Reuters (via Yahoo Finance) and GuruFocus (via Yahoo Finance).
The offering is part of a broader push by Intel to rebuild its manufacturing standing and compete in contract chip production. Intel's data center unit posted 59 percent revenue growth in the most recent quarter, more than double the pace of total company revenue growth, according to Bloomberg data cited by Yahoo Finance. Intel reported second-quarter revenue of $16.1 billion, up 25 percent year over year — its strongest revenue growth in more than 15 years — with chief executive Lip-Bu Tan saying AI was creating "unprecedented demand" for computing, IBTimes reported. Company executives have acknowledged that customer demand has exceeded available manufacturing capacity, according to Reuters, cited by Yahoo Finance.
In July, Intel lifted its capital spending target for the year to $20 billion from $18 billion, and it has pledged to bring its 14A manufacturing process to high-volume output by 2028, Yahoo Finance reported. Capital expenditures tied to the AI boom among major technology companies are on track to reach $765 billion this year and $1.2 trillion in 2027, according to Goldman Sachs estimates cited by CNBC via IBTimes.
Sources
- Yahoo Finance: https://finance.yahoo.com/technology/ai/articles/intel-raises-15-billion-stock-124534191.html
- Yahoo Finance: https://finance.yahoo.com/markets/stocks/articles/intel-falls-3-15-billion-150907007.html
- IBTimes: https://www.ibtimes.com/intel-plans-15-billion-stock-sale-ai-demand-puts-its-factories-overdrive-stocks-fall-3806248
