Intel plans €17bn German factory in bid for chips
Intel Corp. pledged to invest €17 billion euros to build a cutting-edge semiconductor production site in Germany, part of its ambitious plan to restore its leadership in the chip industry.
The Santa Clara, California-based company has committed to spend €23 billion euros in a number of European countries, part of a plan to devote €80 billion to the region over the next decade. France will become home to a new chip research centre, and the company will expand its existing production site in Ireland. Intel also announced it is negotiating with Italy about opening a new packaging site.
The announcement is part of Chief Executive Officer Pat Gelsinger’s bid to reverse losses by developing the latest technology. The plant in Magdeburg, Germany will attempt to produce chips smaller than 2 nanometres, something the company has yet to achieve.
Gelsinger’s arrival in Europe aligns with significant subsidies being rolled out by the European Union, which has set itself the ambitious goal of making 20% of the world’s chip supply by 2030 - quadrupling its production. The EU announced plans last month to free up public funding for the production of chips considered “first of a kind” in Europe.
Intel did not specify how much money it is receiving from EU governments to expand into their countries.
The EU’s Internal Market Commissioner Thierry Breton said he welcomed Intel’s announcement, calling it a “true European project” that creates thousands of jobs and “confirms that Europe is an attractive place to invest in.”
“Europe will be a key player across the entire chips value chain, including in the fast-moving market of cutting-edge technologies below 2nm chips produced in Europe,” Breton said in a statement.
Gelsinger is one of a number of industry executives who’re planning for the $550-billion industry to double over the next decade, and Intel has already committed to increase spending on new factories at an existing site in Arizona and new location in Ohio. He’s called on governments to recognize the security risks of the concentration of production in Asia.
His vision for Intel in the future is of a company that manufacturers semiconductors for other companies, even rivals, and that does it with the best production technology. By committing to Europe and Germany, Intel can speed up the acquisition of new customers. Worldwide shortages have particularly hurt the auto industry which is increasingly reliant on the electronic components, and local plants and guaranteed supply could win him a slice of that growing market.
©2022 Bloomberg L.P.
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