Intel secures $20B government funding for foundry capacity expansion amid AI chip demand.

Intel has raised $20 billion through an upsized share offering to fund expansion of its contract manufacturing business, capitalizing on a sharp rally in its stock driven by the company's turnaround efforts. The company priced the offering at $95 per share, a 2.6 percent discount to Monday's closing price. Intel had initially announced plans to raise $15 billion but increased the size of the offering.

Once a dominant force in the global semiconductor industry, Intel is investing heavily in new manufacturing facilities and advanced packaging capabilities to compete with Taiwan Semiconductor Manufacturing Co. (TSMC) in contract chip production. The company's shares fell more than 4 percent on August 10, yet the stock has nearly tripled this year, outperforming rivals AMD and Nvidia and the Philadelphia Semiconductor Index, which has gained nearly 75 percent. Several analysts said the strong share price rally had increased the likelihood of an equity raise to finance expansion plans.

"As a capital-intensive business that went a long way to wrecking its own balance sheet and prospects by focusing on financial engineering rather than physical engineering, courtesy of $82 billion of share buybacks in the 2010s, it makes perfect sense for Intel to raise money, especially after a five-fold increase in the stock price since last August," said Russ Mould, investment director at AJ Bell.

Growing demand for central processing units driven by AI agents has pushed demand beyond Intel's manufacturing capacity. In July, the company raised its capital expenditure forecast for the year from $18 billion to $20 billion. Intel has also committed to high-volume production of chips using its 14A manufacturing process in 2028, after previously warning the technology could be shelved without a major external customer. Tesla has signed on as a 14A customer for the foundry business, and optimism about another major client grew after U.S. President Donald Trump said Apple would manufacture processors with Intel, though neither company confirmed the claim.

Last month, Intel announced a 5-billion-euro ($5.77 billion) investment to upgrade and expand its chip manufacturing operations in Ireland, a project representing more than 25 percent of its planned 2026 capital spending. JPMorgan Securities, Goldman Sachs, Morgan Stanley, and Citigroup Global Markets are acting as joint book-running managers for the offering.