Challenging TSMC Requires More Capital! Intel Raises $15 Billion Through Stock Offering

U.S. chip giant Intel (INTC-US) announced on Monday (10th) that it plans to raise $15 billion through a stock issuance, taking advantage of its significant stock price gains this year to fund the costly expansion of its semiconductor foundry operations.

Once the dominant leader in the global semiconductor industry, Intel is now making massive investments in new fabrication plants and advanced packaging technologies to catch up with market leaders like Taiwan Semiconductor Manufacturing Company (TSMC) (TSM-US) (2330-TW). Building advanced process capacity requires enormous capital, and this stock offering will provide additional financial flexibility for Intel’s transformation and production expansion plans.

Intel’s pre-market stock price fell more than 3% on Monday, reflecting investor concerns over potential dilution of existing shareholders’ stakes and earnings per share. However, buoyed by investor optimism about the company’s restructuring and turnaround progress, Intel’s stock has risen over 100% year-to-date, outperforming most of its peers and enabling the company to raise funds while its shares are at elevated levels.

Under the offering terms, Intel will also grant underwriters a 30-day option to purchase up to an additional $2.25 billion in shares at the offering price, less underwriting discounts. If the underwriters fully exercise this option, Intel’s total fundraising could reach as high as $17.25 billion.

JPMorgan Securities, Goldman Sachs, Morgan Stanley, and Citigroup Global Markets will jointly serve as the lead book-running managers for this stock offering.