Intel executives are reportedly dealing with a major challenge that affects its portfolio of European manufacturing facilities—a recent RTÉ News article placed focus on Team Blue's Fab 34 site, located in Leixlip, Ireland. Energy costs are climbing across the globe, but inside sources believe that company leaders have expressed concern regarding the cost of powering the Irish facility. Last week's report posits that senior Intel figures are committed to keeping Fab 34 alive for a while—seemingly unaffected by a widespread cost-cutting initiative—this high-volume production site remains: "critical to its European operation for at least the next seven years."

Intel is reportedly already engaged in talks with the Irish government—likely negotiating over strategies that will lower its local energy bills in County Kildare. Additionally, other channels are—supposedly—being explored via the EU Chips Act. RTÉ News gathered comments from unnamed senior sources at the recently concluded Davos World Economic Forum—one individual stated that Ireland's (advantageous) lower labor costs are sharply offset by the higher cost of energy. The report claims that Team Blue: "estimates that in Ireland energy costs are 15 cent per kilowatt-hour, around double that in other markets where Intel operates." Fab 34's operating costs have been compared to similarly-equipped facilities in the USA and Israel. Executive sources believe that Ireland-specific problems stem from infrastructure backlogs in the renewable sector, and the fixed cost of delivering energy from offshore wind farms—the latter tends to pass expenses on to customers.

Intel Corporation today reported second-quarter 2024 financial results. "Our Q2 financial performance was disappointing, even as we hit key product and process technology milestones. Second-half trends are more challenging than we previously expected, and we are leveraging our new operating model to take decisive actions that will improve operating and capital efficiencies while accelerating our IDM 2.0 transformation," said Pat Gelsinger, Intel CEO. "These actions, combined with the launch of Intel 18A next year to regain process technology leadership, will strengthen our position in the market, improve our profitability and create shareholder value."

"Second-quarter results were impacted by gross margin headwinds from the accelerated ramp of our AI PC product, higher than typical charges related to non-core businesses and the impact from unused capacity," said David Zinsner, Intel CFO. "By implementing our spending reductions, we are taking proactive steps to improve our profits and strengthen our balance sheet. We expect these actions to meaningfully improve liquidity and reduce our debt balance while enabling us to make the right investments to drive long-term value for shareholders."

Intel Corporation (Nasdaq: INTC) and Apollo (NYSE: APO) today announced a definitive agreement under which Apollo-managed funds and affiliates will lead an investment of $11 billion to acquire from Intel a 49% equity interest in a joint venture entity related to Intel's Fab 34. The transaction represents Intel's second Semiconductor Co-Investment Program (SCIP) arrangement. SCIP is an element of Intel's Smart Capital strategy, a funding approach designed to create financial flexibility to accelerate the company's strategy, including investing in its global manufacturing operations, while maintaining a strong balance sheet.

Located in Leixlip, Ireland, Fab 34 is Intel's leading-edge high-volume manufacturing (HVM) facility designed for wafers using the Intel 4 and Intel 3 process technologies. To date, Intel has invested $18.4 billion in Fab 34. This transaction allows Intel to unlock and redeploy to other parts of its business a portion of this investment while continuing the build-out of Fab 34. As part of its transformation strategy, Intel has committed billions of dollars of investments to regaining process leadership and building out leading-edge wafer fabrication and advanced packaging capacity globally.