Intel (INTC.US) increases the Irish hub by 5 billion euros to “expand data center CPU production+boom in chip foundry” double bet on AI arms race

The Zhitong Finance App learned that the established US chip manufacturing giant Intel Corporation (INTC.US) plans to spend 5 billion euros (5.7 billion US dollars) to expand its Irish factory. The chip maker is trying to regain its dominant position in the chip manufacturing industry amid the boom in demand for artificial intelligence computing power. Intel said in a statement that this investment will expand chip manufacturing capacity in the Leixlip campus on the outskirts of Dublin, and is an important part of Intel's plans to increase the production of data center processors (that is, data center high-performance CPUs). The company will expand production capacity for high-performance processor products, including its flagship Xeon (Xeon) data center CPU, while advancing R&D activities.

Previously, Intel recently spent $14.2 billion to buy back 49% of Apollo's interest in Ireland's Fab 34 project, which is equivalent to regaining full economic exposure to key manufacturing assets. This is not only a vote of confidence in AI demand and the competitiveness of its own products, but also strengthens the geographical redundancy of semiconductor supply in Europe and outside of the US.

Intel's executive vice president Nagar Chandrasekaran said in a statement that this is also part of a plan to improve Intel's foundry customer delivery capabilities. He was referring to the company's chip foundry and manufacturing business division, which is responsible for producing microchips for other technology companies. This division is a key component of Intel's revival strategy, which aims to increase competitiveness with top chip manufacturing companies such as TSMC and Samsung.

Notably, Intel's investment logic is fundamentally changing: the market no longer sees it as just a traditional consumer electronics central processor manufacturer waiting for the PC cycle to recover, but is beginning to reprice the full-stack AI computing power infrastructure platform based on “data center server CPU+ advanced process chip manufacturing/foundry/advanced packaging”. This is why international financial giant HSBC (HSBC) raised the agency's price target for Intel by 100% to $200 — this is also the highest target point for Intel among Wall Street analysts. Intel can once again be described as one of the most popular semiconductor stocks among retail and institutional investors around the world.

At a time when AI agents (or Agentic AI) are rapidly becoming popular around the world, cloud computing giants and AI leaders are rapidly expanding their artificial intelligence (AI) infrastructure spending, and global AI data center computing power infrastructure is in full swing, HSBC made this aggressive bullish judgment. Although Nvidia (NVDA.US) has always dominated the AI GPU computing power infrastructure market, CPU, advanced packaging, and wafer/semiconductor manufacturing capacity expenses are becoming an increasingly critical part of the AI computing power supply chain system. HSBC believes Intel can benefit from the continued surge in data center CPUs brought about by AI agents and the global AI semiconductor production capacity expansion frenzy led by Musk TeraFab's “superchip factory.”

The White House is trying to turn Intel into a “national chip manufacturing platform”

After many previous setbacks, Intel is currently in the early stages of acquiring customers for its foundry business. US President Donald Trump said in June this year that the chip maker will cooperate with Apple to design and produce semiconductors in the US. If this partnership finally comes to fruition, it may attract more customers to choose Intel.

Intel spent $14.2 billion in April this year to buy back half of its Irish factory previously sold to Apollo Global Management. This reflects the chipmaker's increased confidence in its own business and its belief that its products can play a greater role in the AI infrastructure spending boom.

The injection of capital into the Leixlip campus is also a boon for Ireland, which is highly dependent on foreign direct investment from technology companies. According to an analysis by the Irish Financial Supervisory Authority, only three companies contribute nearly half of the country's corporate tax revenue.

In recent years, concerns about Ireland's dependence on a few multinational companies have further intensified. The Trump administration has criticized Ireland, saying it obtained a trade surplus at the expense of the US, and promised to bring back the profits of American companies to the US as part of its “America First” policy.

“As far as this investment is concerned, I think the US government recognizes that Intel is a global supergiant, and we must continue to invest in American resources, as well as in other regions,” Chandrasekaran told reporters.

Ireland is a key European technology hub for American tech giants such as Intel, Apple, Facebook's parent company Meta Platforms Inc, and Microsoft, and is also facing an unusually high risk of AI-related employment shocks. As Meta invests in using artificial intelligence to improve efficiency, the company recently cut around 20% of its Irish workforce, which is double the average of its global planned layoffs.

Intel currently employs nearly 5,000 people in Ireland. The company chose Ireland as its European center in 1989 and opened its first factory there in 1993. The investment is expected to create hundreds of jobs in Leixlip.

Intel's other major production facility outside of the US is located in Israel. The statement said that the Irish expansion project includes upgrading existing wafer manufacturing facilities and installing production equipment.

Irish Prime Minister Michelle Martin said in a statement that at a time of “global competition,” the investment was “a strong vote of confidence in Ireland.”

Trump's support for Intel since returning to the White House at the end of 2024 has gone beyond traditional subsidies and tax incentives and evolved into a quasi-national industrial policy of “capital injection+customer conduction+business supervision+industry chain localization.” Its core approach is to convert about $9 billion in federal subsidies to 10% of Intel's shares, and bind tariff exemptions, US manufacturing commitments, and procurement decisions of large technology companies to promote Apple's adoption of Intel fabs, and also facilitate Nvidia's $5 billion investment and customized chip cooperation, SpaceX included it in the “Terafab” program, and SoftBank also added 2 billion US dollars in capital.

For Intel, the Trump administration's policy support essentially provides three scarce resources: cash needed to maintain capital expenditure, anchor customers that can verify advanced manufacturing processes and packaging capabilities, and a strategic valuation premium for “replacing TSMC in the US.” At the same time, the US Department of Commerce continues to track customer development, manufacturing technology, and advanced packaging progress, showing that Intel is being shaped as a key public infrastructure in the US AI chip manufacturing, packaging, and supply chain security system, and is no longer just an ordinary commercial company.

From Xeon's price increase to the rise of eMiB's advanced packaging

HSBC believes that Wall Street consensus expectations are too conservative because analysts have failed to fully price the growth trajectory of Intel's chip foundry business. According to the HSBC analyst team, the chip foundry business (including chip manufacturing+advanced packaging) has changed from “optional” to the core valuation variable for Intel's valuation system.

For the first time, HSBC has included Intel foundry in the segmented total valuation model. The reason is that global advanced manufacturing processes and advanced packaging production capacity bottlenecks have been widely recognized by the market, and design promises may appear one after another from the second half of 2026 to 2027; at the same time, the 18A process climbing, internal production capacity redistribution, and EMIB advanced packaging expansion potential may make Intel not only a CPU supplier, but an alternative platform for the AI chip supply chain “made in America+advanced packaging”.

The “Terafab” superchip factory construction project led by SpaceX and Tesla leader Musk further pushes Intel's performance growth narrative from “expansion of PC and data center CPU demand” to “American AI chip manufacturing and advanced packaging platforms.” Intel became a Terafab project partner, which shows that super AI customers are considering circumventing traditional supply chain bottlenecks and directly restructuring chip manufacturing capabilities.

Intel has already received an important manufacturing business opportunity for Musk's Terafab project's next-generation 14A process, and relevant details are still being finalized; MarketWatch quoted a team of UBS analysts as saying that SpaceX's AI-based business capital expenditure over the next five years is about 1.1 trillion US dollars, of which Terafab-related wafer manufacturing equipment expenses may reach about 135 billion US dollars, which is enough to significantly raise the ceiling of the wafer manufacturing equipment market. If Terafab is implemented as a large-scale vertically integrated semiconductor complex integrating design, manufacturing, storage, advanced packaging, and testing, Intel may obtain higher strategic leverage than simple CPU sales through process licensing, advanced packaging, capacity cooperation, or joint venture models; this is also an important reason why banks of America, HSBC, and other institutions are beginning to incorporate Terafab, advanced packaging, and external wafer businesses into the long-term revenue curve of Intel Foundry (Intel Foundry).

The increase in data center CPU prices further validates the CPU supply and demand improvement logic. The recommended customer price for the Xeon (Xeon) 6980P data center flagship CPU was raised from $12,460 to $13,955, an increase of 1,495 US dollars, an increase of about 12%. Some server processors increased by more than $1,000, while specific consumer models were only raised by $30 to 50, showing clear product structure differentiation. The ratio of AI server CPU to GPU support described by Intel management has moved from about 1:8 to 1:4, and may even be closer to 1:1 in high-density intelligent workloads; this means that the CPU is no longer just an auxiliary component for starting and managing the GPU, but rather the center of the system that determines GPU utilization, memory and input/output efficiency, and end-to-end response speed.

EMIB-T may become the most nonlinear breakthrough in Intel's foundry business. This advanced packaging technology created by Intel is expected to upgrade from internal technical capabilities to a source of revenue for large-scale chip foundry businesses. According to SemiAnalysis and industry research institutes, Google's next generation TPU, codenamed HumuFish, plans to use Intel EMIB-T instead of the traditional TSMC CoVos package; EMIB reduces large intermediate layer area, wafer edge waste, and mask size constraints by only embedding small silicon bridges where the die requires high-speed interconnection, and EMIB-T also uses silicon holes to improve vertical power supply, making it more suitable for larger packages, next-generation high-bandwidth memories and high-power AI chips.

The strategic significance of the rise of Intel's chip foundry and advanced packaging business is not that Intel immediately takes away TSMC's advanced process orders — TPU computing chips may still be manufactured by TSMC — but rather that Intel is more likely to first switch from the advanced chip packaging side to the supply chain of hyperscale cloud vendors and local US technology giants such as SpaceX and Tesla to establish external customer, scale, and yield records.