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March 15, 2022

Intel Corp. pledged to invest 17 billion euros ($18.7 billion) to build a cutting-edge semiconductor production site in Germany, marking the beginning of Europe’s ambitious attempt to lure global chipmakers back to the region.

The Santa Clara, California-based company has committed to spend 33 billion euros in a number of European countries, part of a plan to devote 80 billion euros 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 nanometers, 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 and has recently revealed an investment plan of 45 billion euros in public and private money to fund the project.

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.

Intel is going to spend a further 12 billion euros to expand its facility in Leixlip, Ireland, doubling the manufacturing space there and bringing the total investment in the country to 30 billion euros.

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 increasing spending on new factories at an existing site in Arizona and a 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 electronic components, and local plants and guaranteed supply could win him a slice of that growing market.

“Today 80% of chips are produced in Asia,” said Gelsinger. “Our pan European investment addresses the global need for a more balanced and resilient supply chain. We are planning to bring the most advanced technology to Europe and helping EU create the next-generation European chip ecosystem.”

SOURCE: Bloomberg