Foundry

In recent months, we heard numerous rumors about Intel’s alleged plans to spin off its Intel Foundry manufacturing arm and then sell a significant stake to potential customers, or the U.S. government’s supposed intention to force Intel to spin off Intel Foundry and then make TSMC buy a 49% stake in Intel’s U.S. manufacturing operations. None of this has materialized, and it’s possible that it never will. However, at a recent industry event, Intel’s Chief Financial Officer said that the company could theoretically sell up to a 49% stake in Intel Foundry without running into issues with the U.S. government. However, given that Intel does not own 100% of Intel Foundry’s assets, would it make financial sense to spin off or IPO Intel Foundry?

“The structure of the government financing is that they also got warrants associated with Intel stock, it triggers off [if we sell] below or selling more than 50% of the business,” said David Zinsner, the CFO of Intel, at Citi’s 2025 Global TMT Conference. “I think, as long as we hold 51% essentially it does not trigger, and it is a five-year warrant. […] Our motivation will probably be not to sell below 51% because that would dilute investors significantly. Unless it made economic sense for investors for us to do that. So, the likelihood is, if we are selling stakes in Foundry, it would be something less than 49% that would be sold off.”

Keeping Intel Foundry an American foundry

According to Intel’s contract agreement with the U.S. government, under which Intel converted its grants into cash in exchange for equity, the company must control at least 51% of Intel Foundry over the next five years or risk triggering punitive clauses (a 5% warrant at $20/share). The same terms applied to Intel’s grants under the CHIPS and Science Act, so the company was obliged to maintain a majority ownership stake in its Intel Foundry for some time.

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From the U.S. government’s point of view, by holding the majority, Intel keeps the foundry business aligned with U.S. national security and reshoring goals and ensures domestic fab capacity remains under the control of a U.S. company, which is particularly important given geopolitical risks (i.e., China–Taiwan tensions).

However, requiring Intel to retain majority ownership (over 51%) of its Intel Foundry unit significantly disrupts the possibility of a full spin-off — at least in the next five years. A true spin-off would typically mean Intel divests its foundry operations into a separate, independent company with its own ownership and governance (as AMD did with GlobalFoundries in 2009). But a 51% requirement constrains this, capping how much capital Intel can raise from outside investors, which may be needed to stay competitive with TSMC, Samsung, or emerging Chinese foundries.

Semiconductor Co-Investment Program (SCIP)

While for now Intel controls and operates all of its semiconductor production capacities in the U.S., Ireland, and Israel, as well as packaging facilities in the U.S., Puerto Rico, Malaysia, and China, it should be noted that Intel does not completely own all of its fabs.

Back in 2022, Intel kicked off its Semiconductor Co-Investment Program (SCIP) arrangement, under which it attracted investors (and essentially raised $26 billion) without violating the CHIPS Act requirement or the U.S. government’s 51% ownership clause tied to a potential Intel Foundry spin-off.

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However, this means that Intel lost 100% control of its advanced fabs. As a result, Intel’s leading-edge Fab 52 and Fab 62, located in the Ocotillo campus in Arizona, are co-owned by Intel (51%) and Brookfield Infrastructure (49%). The company’s Fab 34 in Ireland is also owned by Intel (51%) and Apollo Global Management (49%).

These arrangements under the SCIP program are not a spin-off, but asset-level co-financing structures, so the foundry unit stays inside Intel. Intel still owns and operates the fabs, but splits the capital investment with partners like Brookfield Infrastructure and Apollo Global Management. In each case, Intel retains exactly 51% equity and operational control, meaning it does not breach the U.S. government’s ownership clause for CHIPS funding or equity conversion.

In theory, if Intel decides to start building out its Silicon Heartland site in Ohio in the coming years (not sometime in the 2030s), then it can use the same SCIP program to raise the necessary capital and build new capacity without requiring a spin-off or IPO and without violating the contract with the U.S. government.

IPO is still a possibility

Potentially, Intel’s SCIP initiative does not stop a hypothetical IPO as there is a difference between corporate equity of Intel Foundry and project-level asset ownership (e.g., Fab 52, Fab 62, Fab 34). From an IPO perspective, selling 49% of Intel Foundry means selling a stake in the overall earnings and cash flow of the foundry business, not in each fab’s underlying real estate or assets.

The Intel Foundry division includes the full foundry business — such as process technologies that cost billions, design services, customer contracts, and global capacity — even if some fabs (like Fab 52/62 in Arizona and Fab 34 in Ireland) are only 51%-owned via joint ventures with Brookfield and Apollo. Intel still retains operational control of these fabs and consolidates their revenue, so they remain part of the foundry offering.

However, the partial fab ownership introduces minority interest adjustments in financial reporting, so investors would still value Intel Foundry based on its total capacity, customer pipeline, and roadmap, with appropriate discounts or disclosures for asset-level co-investments.

As a consequence, partial ownership of key fabs by third parties means Intel would likely raise less money in an Intel Foundry IPO, as investors will discount the valuation to reflect the fact that Intel does not retain 100% of the cash flow from those facilities. While Intel still controls Intel Foundry as a corporate entity and consolidates fab revenues, its share of profits from co-owned fabs is limited to 51%. Investors will factor in these minority interests and payout obligations when pricing shares. The added complexity also introduces risk, which may further reduce the valuation, which means that it may make no financial sense for Intel to IPO or spin off Intel Foundry.

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