Intel inventory pops because it buys again Ireland chip fab in signal of power | UNW

Intel shares jumped 10% Wednesday after the U.S chipmaker announced it would repurchase the 49% equity interest it did not own in its Fab 34 chip facility in Ireland for $14.2 billion.

The semiconductor company sold the 49% stake in its Ireland manufacturing facility to buyout firm Apollo Global Management in 2024 for $11.2 billion.

“Our 2024 agreement was the right structure at the right time and provided Intel with meaningful flexibility, enabling us to accelerate critical initiatives,” Intel CFO David Zinser said in a press release. “Today, we have a stronger balance sheet, improved financial discipline and an evolved business strategy.”

The move is a sign that the company is back on solid footing with renewed confidence.

When Intel sold its stake in 2024, it was a very different time for the U.S.-chipmaker. The company was in the midst of a $100 billion investment to expand chipmaking in the U.S., including a massive chip fabrication plant, or fab, that opened in Arizona last year.

After years of falling behind chipmaking leader Taiwan Semiconductor Manufacturing Company, former CEO Pat Gelsinger went all-in on Intel’s foundry ambitions in the U.S. He was ousted at the end of 2024, but Intel’s Arizona chip factory project remained on track.

Intel said the repurchase agreement is “underpinned by the growing and essential role CPUs play in the era of AI.”

Intel is known for making industry-leading PC and server central processing units, or CPUs, but has a different business model from most chipmakers.

While other leaders like AMD and Nvidia outsource the complex and expensive manufacturing of their silicon, Intel both designs and manufactures its own chips — with hopes of manufacturing for others, too.

At Fab 34 in Ireland, Intel manufactures PC and server CPUs using less advanced chip nodes than what it makes in Arizona, but a renewed need for CPUs is driving demand across the board.

Intel told CNBC that its strongest demand right now is for server CPUs, including its latest Xeon 6 CPU made in Ireland.

Nvidia recently told CNBC that CPUs are “becoming the bottleneck” as agentic artificial intelligence changes compute needs.

Futurum Group called it a “quiet supply crisis,” predicting the CPU market growth rate could exceed the growth of GPUs, or graphics processing units, by 2028.

While GPUs are ideal for training and running AI models because their thousands of cores can perform many operations simultaneously, CPUs have a smaller number of powerful cores running sequential general-purpose tasks. Agentic AI requires a lot of general compute power, with large amounts of data moving around across multiple agents.

In the latest signals of the CPU renaissance, Nvidia CEO Jensen Huang unveiled an entire rack filled only with Vera CPUs earlier this month, and U.K. chip architecture firm Arm Holdings unveiled its first in-house chip — also a CPU.

Intel now manufactures chips at its most advanced node, 18A, in Arizona but has yet to secure a major external customer. For now, Intel is its own primary customer, making its Core Ultra series 3 PC processor at that plant.

In Ireland, Intel makes earlier generations of its PC processor, and makes its latest server CPU on Intel 3, the generation preceding 18A. 

Intel 3 is the second generation of chip technology that the company makes using ASML‘s extreme ultraviolet lithography machines. These EUV machines are also used to make 18A, opening up the possibility that Intel could make more advanced chips in Ireland down the road.

Intel told CNBC there are no plans for 18A at Fab 34 in the near-term. 

The Ireland fab is also crucial to a different step in the chipmaking process called advanced packaging, which is required to connect the individual chips to larger systems like a circuit board. Intel told CNBC it does a portion of the advanced packaging for its 18A chips at the Ireland fab.