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Germany Gains Big as Intel Spreads Chip Investments Across Six EU Countries

FILE PHOTO: The Intel Corporation logo is seen on a display at a store in Manhattan, New York City
FILE PHOTO: The Intel Corporation logo is seen on a display at a store in Manhattan, New York City on November 24, 2021. REUTERS/Andrew Kelly

March 15, 2022

By Supantha Mukherjee, Foo Yun Chee and Jane Lanhee Lee

STOCKHOLM/BRUSSELS/SAN FRANCISCO (Reuters) – Intel has chosen Germany as the location for a massive new chip manufacturing complex and revealed the first details of an $88 billion investment drive across Europe aimed at reducing its reliance on imports and the supply to facilitate crunch for manufacturers.

The plan is the latest major investment announcement from a major semiconductor maker as the industry tries to catch up with the boom in demand for chips used in everything from smartphones to cars, although there will be no quick fix as the new German plants will will not be online until 2027.

The US chipmaker is spreading its investments in Europe across half a dozen countries, including strengthening its existing factory in Ireland, establishing a design and research facility in France and a packaging and assembly site in Italy.

Initial spending totals 33 billion euros ($36 billion), including 17 billion euros in Germany, where the auto industry is likely to be a major customer for cutting-edge chips that could use technology as small as 2 nanometers.

German automaker Volkswagen on Tuesday highlighted the pain caused by chip shortages and said it sold 2 million fewer cars than planned last year because of the problem.

Intel’s announcement comes after the European Commission last month unveiled plans to boost chip manufacturing in the European Union, with proposed new legislation to relax state aid rules for chip factories and allow for 17 additional public and private investments billion dollars.

Chipmakers want to build more factories to make advanced chips for use in premium smartphones like Apple’s latest iPhones, which use 5-nanometer chips. A nanometer is only a few atoms wide.

Bernstein Research analyst Stacy Rasgon was confident Intel can manage the rollout investment to meet future demand and was confident of expanding with government subsidies.

“(Intel) is using capacity as a strategic weapon… Part of the strategy right now is to go around the world begging for money,” Rasgon said. “If there’s any time to run the world begging for money to build semiconductor manufacturing facilities, now is the time.”

GREAT INCENTIVES

Germany has emerged as a big winner by cornering most of Intel’s investments, but CEO Pat Gelsinger declined to specify the amount of state aid the company is receiving from the country.

Intel will build two factories in Magdeburg, Germany, creating 7,000 construction jobs, 3,000 permanent jobs at the company and tens of thousands of additional jobs at suppliers and partners, it said.

Gelsinger said that Intel intends to spend the remaining money of its planned EUR 80 billion investment over the next 10 years on the expansion of the entire Magdeburg site and the further development of the sites in Italy and France.

The company will invest an additional EUR 12 billion in an existing facility in Ireland, bringing its total investment in Ireland to over EUR 30 billion.

It is also in talks with Italy for a chip assembly and packaging facility for a potential investment of up to €4.5 billion, expected to be operational between 2025 and 2027.

In France, Intel plans to build its new European research center, which will create 1,000 new high-tech jobs.

The company will also increase its laboratory space in Poland and plans to set up joint laboratories with the Barcelona Supercomputing Center in Spain for advanced computers.

Gelsinger announced plans in September to spend $88 billion in Europe over the next decade, and the choice of locations comes after some EU governments, including Italy, offered big stimulus to try to persuade the chipmaker to do so to invest in their countries.

Distributing its factories across different locations could help the company get more subsidies from different countries.

However, Intel must negotiate with any European country where it seeks state aid bodies, EU Industry Commissioner Thierry Breton told journalists.

He also said the commission is in talks with other chipmakers and hopes to make similar announcements in the coming months, but gave no details.

($1 = €0.9098) (This story has been refiled to replace the old company logo)

(Reporting by Supantha Mukherjee in Stockholm, Foo Yun Chee in Brussels, Jane Lanhee Lee in San Francisco, and Nadine Schimroszik in Berlin; Editing by Josephine Mason and Mark Potter)

https://www.oann.com/intel-picks-eu-chip-factory-sites-in-race-to-boost-supplies/?utm_source=rss&utm_medium=rss&utm_campaign=intel-picks-eu-chip-factory-sites-in-race-to-boost-supplies Germany Gains Big as Intel Spreads Chip Investments Across Six EU Countries

DUSTIN JONES

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