Intel's CFO describes company plans for debt, foundry, and future tech
Intel's CFO David Zinsner appreciated the recent technology conference with crucial financial and technological insights into the Intel situation, boosting the stock by 2%. The Altera divestment is confirmed to be on track for closure, and Zinsner elaborated on how Intel would manage its debt with incoming money while touching on the future of Intel Foundry and its partnership with TSMC.
Use of New Funds in Clearing Debt due 2025
Zinsner explained that the U.S. government's equity investment has unlocked a lot of big, significant uncertainty regarding the $5.7 billion of grant money. This deal provided Intel with upfront cash, combining with more from other sources, which will be used for paying off maturing debts without refinancing.
- Altera Divestiture: Scheduled to be completed in the next few weeks, yielding an additional $3.5 billion in cash.
- Softbank Investment: Expected to flow in by the end of the quarter subject to regulatory clearance.
- Debt Payment: The amount will be used to settle the $3.8-billion debt accrued this year.
The Way Forward for the Intel Foundry Business
On restructuring the Foundry business as an independent entity for possible external investments, Zinsner said, it has been fashioned into a subsidiary to give that flexibility. However, he said that investment event is not likely to happen "anytime soon" since this business is "not quite investable yet." He added that because of the government warrants, any sale of a stake in the Foundry business would be limited to less than 49%.
A Look at Next-generation 14A Process
Zinsner has remarked CEO Lip-Bu Tan looked more comfortable with the upcoming 14A process. It should be learned that 14A also is going to cost more than 18A.
- Higher Cost Drivers: Zinsner laid the increased costs to two major reasons, namely usage of High-NA EUV tools and additional, more complex lithography steps.
He admitted possibility though a customer for the process might not be secured, he sees a "relatively low likelihood it goes that way."
Intel Foundry's continued relationship with TSMC
Zinsner made clear that regarding its customer relationship with competing foundry TSMC, Intel would continue as a customer. "Intel will be putting products on TSMC, you know, forever really. You know, they're a great partner for us," he cited their technology and support.
- Current Relying: Roughly 30% of Intel's products, including components for Lunar Lake and Arrow Lake, currently are from TSMC.
- The future is bright: This percentage is expected to go down as Intel's own foundry business grows, yet remains higher than a decade ago.
