The stock of Intel (INTC) fell 4% on Aug. 10 after the chipmaker announced plans for a new $15 billion U.S. share sale.
Intel said it is raising capital as it looks to fund the costly buildout of its microchip contract manufacturing business and fuel an ongoing turnaround in its business.
The share sale comes with INTC stock having risen 148% this year.
However, stock sales are often frowned upon by investors as they dilute existing shareholders and can put downward pressure on a company’s share price.
Intel said it needs to raise money as it invests heavily in new facilities to challenge industry leaders such as Taiwan Semiconductor (TSM) in contract chip manufacturing.
Demand for the company’s central processing units (CPUs) that are used in artificial intelligence (A.I.) data centres has outstripped the company’s manufacturing capacity, said Intel.
Intel has planned capital expenditures this year of $20 billion U.S.
The company’s burgeoning foundry business recently won Tesla (TSLA) as a customer and there are rumors that Apple (AAPL) might also make processors with Intel.
Wall Street investment banks Goldman Sachs (GS) and Morgan Stanley (MS) are acting as joint bookrunners on Intel’s share sale.
INTC stock has gained 373% in the past 12 months to trade at $97.52 U.S. per share.
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