Germany wins big as Intel spreads chip investments across six EU countries


  • Presents a first European investment of 33 billion euros
  • Includes 17 billion euros on the main German site
  • Investments also in Ireland, Italy and France

STOCKHOLM/BRUSSELS/SAN FRANCISCO, March 15 (Reuters) – Intel has chosen Germany as the site of a massive new chipmaking complex, giving the first details of an $88 billion investment drive across Europe, which is struggling to reduce its dependence on imports and alleviate a supply shortage for manufacturers.

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

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

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Initial spending will total 33 billion euros ($36 billion), including 17 billion euros in Germany, where the automotive industry is likely to be a prime customer for cutting-edge chips that could use such technology. smaller than 2 nanometers.

German automaker Volkswagen (VOWG_p.DE) highlighted the pain caused by chip shortages on Tuesday, saying it sold 2 million fewer cars than expected last year due to the problem. Read more

Intel’s announcement comes after the European Commission presented plans last month to encourage chip manufacturing in the European Union, with new legislation proposed to ease state aid rules for microchips. chip factories and enable $17 billion in additional public and private investment. Read more

Chipmakers are looking to build more factories to make advanced chips for use in high-end smartphones like Apple’s latest iPhones that use chips with 5-nanometer technology. A nanometer is only a few atoms wide.

Bernstein Research analyst Stacy Rasgon was confident that Intel could manage rolling out investments to meet demand in the future, and was positive about expanding with government subsidies.

“(Intel) uses capability as a strategic weapon… Part of the current strategy is to go around the world and beg for money,” Rasgon said. “If it’s time to travel the world begging for money to build semiconductor manufacturing facilities, now is the time.”

GREAT INCENTIVES

Germany emerged as the big winner by taking the bulk of Intel’s investment, but CEO Pat Gelsinger declined to say how much state aid the company is receiving from the country.

Visitors are seen at the Intel booth during the China Digital Entertainment Expo and Conference, also known as ChinaJoy, in Shanghai, China July 30, 2021. Picture taken July 30, 2021. REUTERS/Aly Song

Intel will build two factories in Magdeburg, Germany, creating 7,000 construction jobs, 3,000 permanent company jobs and tens of thousands more jobs with suppliers and partners, he said.

Gelsinger said Intel wants to spend the rest of its planned €80 billion investment over the next 10 years to build the full Magdeburg site and further develop the sites in Italy and France.

The company will invest a further €12 billion in an existing Irish facility, bringing its total investment in Ireland to over €30 billion.

It is also in talks with Italy for a chip assembly and packaging plant for a potential investment of up to 4.5 billion euros, which is expected to start operations between 2025 and 2027.

In France, Intel plans to build its new European research hub, creating 1,000 new high-tech jobs.

The company will also increase its lab space in Poland and plans to establish joint labs with the Barcelona Supercomputing Center in Spain for edge computing.

Gelsinger announced plans in September to spend $88 billion in Europe over the next decade, and the choice of sites comes after some EU governments, including Italy, offered big incentives to try to seduce the chipmaker to invest in their country. Read more

Spreading its factories over different sites could help the company get more subsidies from different countries.

But Intel will have to negotiate with every European country where it is setting up facilities for state aid, EU Industry Commissioner Thierry Breton told reporters.

He also said the Commission was talking with other chipmakers and hoped to make similar announcements in the coming months, but did not provide details.

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(This story has been reclassified to replace the old company logo.)

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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

Our standards: The Thomson Reuters Trust Principles.

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