Intel upsizes stock sale to $20B with spending plans still fuzzy

Intel is planning to raise $20 billion through a public offering of common stock, a significant increase from the initially announced $15 billion. The company priced the shares at $95 apiece, offering 210,526,315 shares at a 6.5 percent discount to Friday's closing level. Underwriters have the option to purchase up to 31,578,947 additional shares at the same price within a 30-day window.

The funds raised are intended for general corporate purposes, including capital expenditures, working capital, and emerging areas such as physical AI, purpose-built silicon, advanced packaging, and external wafers. Intel has also expressed interest in using the money to build its Intel Foundry into a full-fledged contract chipmaking business, a goal it has been pursuing for some time. However, the silicon giant's higher-than-expected costs have raised doubts about the exact use of the funds.

Analysts have varying opinions on the purpose of the cash. Gartner Vice President analyst for AI Infrastructure, Semiconductors and Quantum, Gaurav Gupta, noted that the use of funds is not well-defined and that chipmakers typically seek much larger amounts for significant expansion. Despite the ambiguity, the move is seen as opportunistic by some, allowing Intel to create new fabs, pursue M&A, and fund other activities with cash on hand.

Moorhead from Moor Insights & Strategy believes the offering indicates strong demand for Intel's products, suggesting it could be a vote of confidence in Intel Foundry. Intel has already begun risk production using its 18A-P fabrication process, the first of its planned enhancements for its cutting-edge 18A process, potentially the first to be used for commercial customers. The chipmaker aims to turn the corner after a dismal period, losing $267 million on revenues of $52.9 billion in 2025.