Original Title: Intel Should Raise Capital
Original Author: Semianalysis
Edited by: Peggy, BlockBeats

Editor's note: Since breaking out of the rally in early April, Intel's stock price has been steadily recovering, with two key catalysts in June: first, rumors that Google placed AI chip orders with Intel, causing its stock to surge in a single day; second, Bank of America unusually upgraded Intel's rating from "Underperform" to "Buy," raising the target price from $96 to $135. Behind this rebound, the market is re-pricing not just Intel's short-term performance, but also its strategic position in AI CPUs, advanced process foundry, and the U.S. domestic chip supply chain.

INTC Stock Price Trend

Now, Intel's transformation narrative is shifting from "self-rescue" to "further expansion." With Li-Wu Chen taking over as CEO, a new board of directors replacing the old, and strategic investments from the U.S. government, SoftBank, Nvidia, and others, market expectations for Intel have clearly improved. But this article reminds us that what truly determines whether Intel can re-enter the core of advanced process manufacturing is not just customer commitments and stock price rebounds, but whether it has enough capital to truly build out its foundry capacity.

The author believes that many of Intel's problems over the past decade stemmed from financial engineering: selling assets, bringing in joint venture partners, and using Smart Capital (reducing capital expenditure pressure through joint ventures and asset disposals) to ease cash flow, but at the cost of sacrificing long-term gains from core assets like wafer fabs.

Today, what Intel should do most urgently is not buy back shares, but leverage its strong stock price to raise equity financing. The reason is straightforward: on one hand, the current valuation is high, and a 4% to 5% equity dilution could raise about $25 billion, enough to significantly enhance Intel's capacity to build advanced process nodes; on the other hand, the previous entry prices of strategic investors like the U.S. government, SoftBank, and Nvidia were below the current stock price. Issuing new shares now does not necessarily "punish" new shareholders; instead, it could increase book value per share and allow these strategic investors to realize paper gains.

More importantly, alternative financing methods Intel has tried in the past have proven costly. Whether selling NAND, reducing Mobileye holdings, divesting Altera, or using SCIP (Semiconductor Co-Investment Program, exchanging wafer fab long-term revenue rights for external capital), these are essentially assets and future revenue streams exchanged for cash. Now, Intel has spent $14.2 billion to buy back Apollo's stake in Fab 34, which directly shows that relinquishing wafer fab economic benefits was not cheap. Continuing to take on debt would increase balance sheet pressure, while asset sales are limited; thus, equity remains the cheapest and cleanest source of funds at present.

Therefore, the core judgment of this article is: Intel no longer lacks a "revival story," but what it truly needs is the capital to realize that story. Demand for Agentic CPUs (new CPUs for the AI era), potential large clients like SpaceX and Tesla, and orders from Nvidia and Google provide a demand base that can be showcased to the capital markets. For Intel, issuing new shares is not just dilution; it is an opportunity to use cheap capital to acquire advanced process capacity, foundry business, and execute its silicon sovereignty narrative. Missing this window could be more costly than the capital itself.

Below is the original text (reorganized for readability):

We have written many articles about Intel. For us, this company holds special significance; it can almost be called the starting point of the semiconductor industry. Simply saying we love Intel and recognize its role in the world is far from enough. In the past, when Intel's early products faltered, we were very straightforward in pointing out the issues; and we have always supported and looked forward to its transformation. One of our firmest judgments is that Intel's board of directors is one of the main responsible parties for its decline, and recently, we have finally seen the changes we have long hoped for.

Franky Yeary served on the board for 17 years before stepping down. The new board is now composed of people who truly understand this industry, not just financial engineers. The new chairman previously worked at Qualcomm; Li-Wu Chen (Lip-Bu Tan) is the CEO; Steve Sanghi of Microchip, Stacey Smith, and Eric Meurice of ASML are also on the board. In other words, this board finally truly understands technology.

However, despite Intel's partial initiation of its transformation, it remains a long road to fully revitalizing the company. We believe that under this new board, Intel should make another major strategic bet: not share buybacks, but issuing enough new shares to completely repair its financial health in one go.

Li-Wu Chen has pulled Intel back from the brink and raised about $20 billion through U.S. government investments, SoftBank, Altera, and Nvidia strategic investments. Intel should not stop halfway but continue to leverage the current strong stock price. In the bad years past, the company was a net buyer of its own stock; now is the time to issue equity while the stock is strong. If done properly, this will make Intel's transformation easier to succeed.

Note: Li-Wu Chen is Intel's CEO, appointed in March 2025, and also joined the board of directors.

Dilution now rewards existing investors

Look at the prices at which these funds entered. The U.S. government subscribed to a maximum of 433 million shares at $20.47 per share, representing a 9.9% stake at signing; as of the end of Q1, 149 million shares are still in escrow. SoftBank's entry price was $23.00; Nvidia's was $23.28. Today, all these holders are in profit.

Therefore, the intuition that financing would punish recent investors is actually wrong. Issuing shares at today's much higher stock price will increase book value per share and allow the U.S. government, SoftBank, and Nvidia to realize paper gains. That nearly 10% sovereign capital anchor is also a key reason why Intel can conduct large-scale issuance at lower costs. Intel is one of the few global companies capable of large-scale stock sales in a hot market while having U.S. government backing. As long as this leverage exists, it is worth utilizing.

Intel needs capital to execute its transformation

Based on the past 12 months' performance, Intel has rarely been as expensive since the dot-com bubble in 2000. We believe the company's prospects are bright, but realizing this requires one key element: capital; and the current stock price does not fully reflect the true execution risks.

More importantly, even if demand for Agentic CPUs (new CPUs for the AI era) rebounds and the outlook is most optimistic, Intel cannot bear all the investments needed for the rally alone. We believe now is the time for Intel to do a "reverse buyback": leverage the current market demand for stock issuance to raise equity financing.

Equity is now the cheapest capital Intel can access

Opponents might say Intel has other ways to finance its fabs. But it has already tried all of them, and has just demonstrated to the market that these methods are not very effective.

Apollo invested $11.2 billion for a 49% stake in Fab 34 joint venture; Brookfield designed a financing structure for the Arizona fab project; Silver Lake acquired 51% of Altera at an enterprise value of $8.75 billion, bringing about $4.3 billion in net cash to Intel. Intel also phased out NAND business sales to SK Hynix and continued to sell Mobileye shares. "Smart Capital" (reducing capital expenditure pressure through joint ventures and asset sales) was once Intel's core narrative.

Then, on March 31, 2026, Intel agreed to repurchase Apollo's 49% stake in Fab 34, completing the deal on April 8 for $14.2 billion, including about $7.7 billion in cash and $6.5 billion in bridge loans. Management said this buyback would boost earnings, and they are right—this is the key. If repurchasing wafer fab equity boosts earnings, then selling the economic benefits of fabs to partners was essentially expensive financing all along. SCIP (Semiconductor Co-Investment Program) effectively transfers part of the company's most valuable assets' long-term revenue rights to external investors in exchange for capital that appears cheaper on the surface but is actually more costly. Intel has now proven with its own checkbook that it prefers to hold its fabs and bear the debt rather than continue relinquishing fab benefits.

So, dismiss other options. Continuing with more SCIP is just another form of the kind of decision Intel just reversed with $14.2 billion. Taking on more debt would add to the existing $45 billion in liabilities; if including the bridge loan for Apollo, total debt would reach about $51.5 billion. Major asset sales are mostly done—Mobileye and Altera are either sold or have sold stakes. The remaining option is equity financing. At current valuation levels, equity is Intel's cheapest capital.

With the announcement of large Terafab projects and spillover demand from N3 shortages, Intel's foundry business has just begun. To truly seize this unique window, Intel must become a key supplier in the industry during the supply crunch for advanced process wafers. The massive bet needed far exceeds what Intel can afford relying solely on operating cash flow.

Just 4% to 5% equity dilution could raise about $25 billion, enough to turn the most optimistic capacity narrative into reality at this critical moment.

Agentic CPU demand is not enough to cover Terafab's bills

The commitments from major clients like SpaceX, Tesla, and Terafab are crucial to solving the 14A capacity issue. The initial goal is to reach 100k wafers per month (WSPM), then expand to 1 million—this will be very difficult and impose heavy capital pressure. But it must happen because Li-Wu Chen has publicly told the market: if there are no clients, he will shut down foundry operations. Now that clients are coming, it’s time to build.

In addition to Terafab partners, Intel's order book is filling up. Nvidia's DGX Rubin NVL8 configuration lists dual Intel Xeon 6-core CPUs; Google has signed a multi-year agreement covering Xeon and custom IPUs; SambaNova is also entering inference business. The wafer volumes behind these orders are not fully disclosed, but the capital market is funding a visible order book at a much lower cost than financing a transformation story. Intel finally has orders to show the market. Financing equity based on signed demand is a different logic from financing based on a promise.

Due to weaker-than-expected CPU demand, Intel has been delaying capital expenditures as much as possible. But now, it’s time to go all-in again, like during Gelsinger’s era. This is a critical moment for silicon sovereignty; Intel must continue to increase its investment.

Intel’s full multi-stage project could cost up to $119 billion. While SpaceX will provide initial capital, Intel must also make meaningful contributions. Even marginal capital support would mean hundreds of billions of dollars in new funding, which a month ago was not even in Intel’s capital expenditure decision matrix.

Now is the time to end a decade of financial engineering and issue stock immediately. Although capacity ramp-up is exciting, it will be very expensive. The current equity issuance window is the widest in some time; if Cerebras can raise $5.55 billion, Intel could raise $25 billion. This view is only strengthened by Intel’s roughly $498 billion market cap, which can support much larger subsequent issuances. Our observations suggest this window is fully open. Here are some recent issuance case data.

The trading window is now open

In other words, Intel’s real problem now is no longer "whether there is a story," but "whether there is enough capital to turn the story into capacity." With strategic capital from the U.S. government, SoftBank, Nvidia already in place, and supply of advanced process nodes in tight supply, equity financing is no longer just a defensive move to dilute shareholders but could be an offensive move to restart foundry ambitions and bet on silicon sovereignty. For Intel, missing this financing window might be more costly than the dilution itself.

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