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Intel has been announcing deals left, right, and center these days. However, at least one of those deals might just have been a ploy in the greater scheme of things.
INTEL POLAND INVESTMENT
On the same day that Micron announced their AT investment in China, Intel made a surprise announcement about a brand new, greenfield AT investment in Wrocław, Poland. pic.twitter.com/vyQDgx3ZTx
— Smartkarma (@smartkarma) June 21, 2023
Intel recently announced a new $4.6 billion greenfield Assembly Test (AT) facility in Wroclaw, Poland. Interestingly, the facility will be able to cater to the demand that Intel only expects to materialize by 2027.
The answer may have been provided in yet another announcement from Intel three days later on June 19 pic.twitter.com/xPQ3R9BW7x
— Smartkarma (@smartkarma) June 21, 2023
According to SmartKarma, the Poland facility might have been a ruse to persuade German authorities to finalize the Letter of Intent (LOI) regarding a new $32 billion wafer fabrication facility in Magdeburg, Germany.
The Poland investment came out of the blue.
Could it have been used as a bargaining chip on Intel’s part to speed things along with the Magdeburg negotiations?
The timing here just seems awfully coincidental.
— Smartkarma (@smartkarma) June 21, 2023
This thesis is lent credence by the fact that the negotiations between Intel and the German authorities had been going on for well over 6 months, with state subsidies emerging as the biggest sticking point. However, just three days after Intel's announcement of an AT facility in Poland, the semiconductor giant and the German authorities were magically able to resolve their differences.
Meanwhile, Intel recently announced that its transition to an Internal Foundry Model will contribute to already-pledged cost savings of between $8 and $10 billion by the end of 2025. The company hopes to utilize these cost savings to transition toward an operating margin of 40 percent and a long-term gross margin of around 60 percent.
While explaining the details of this new structure, Intel's CFO noted:
"As we transition to the IDM 2.0, the manufacturing group will have a standalone P&L. Revenue will be based on wafer sales to the business units at market pricing, while costs will continue to be based on true manufacturing costs. As such, the manufacturing business will begin to generate a margin."
In other news, Intel is eyeing the role of the anchor investor in ARM's upcoming IPO. ARM is expected to raise anywhere between $8 billion and $10 billion by publicly listing its shares later this year. In recent weeks, the semiconductor giant has accelerated its cooperation with ARM on numerous fronts. The two companies recently signed a multi-generational agreement to manufacture next-gen mobile SoCs on Intel's 18A process node. Under the deal, ARM can leverage Intel's "open system foundry model" to customize diverse areas such as chipsets, packaging, and software. Do note that Intel has, up till now, predominantly delved into the manufacturing of x86 chips.
About the author: Writing is my one incontrovertible passion. Over the past six years, he has authored over 2,200 distinct articles on financial and tech-related topics, spanning nearly 1 million words. And he has been a member of Wcctech mobile team since 2025. As an alumnus of the University of Toronto, Rotman Commerce Program, I bring nuance, in-depth knowledge, and a unique perspective to every topic that I cover. When I'm not writing, I'm traveling the world, exploring hidden confectionaries and restaurants as an aspiring food connoisseur.
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