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, though there will
be no quick fix as the new German plants won't come online until 2027.
The US chipmaker is spreading its investments in Europe
around half a dozen countries, including boosting its existing factory in
Ireland, setting up a design and research facility in France, and a packaging
and assembly site in Italy.
The initial spending will total EUR 33 billion, including
EUR 17 billion in Germany, where the auto industry is likely to be a prime
customer for cutting-edge chips that could use technology as small as
2-nanometers.
German automaker Volkswagen highlighted the pain caused by
chip shortages on Tuesday, saying it sold 2 million fewer cars than planned
last year due to the issue.
Intel's announcement comes after the European Commission
last month set out plans to encourage chip manufacturing in the European Union,
with proposed new legislation to ease state aid rules for chip factories and
enable $17 billion in additional public and private investment.
Chipmakers are looking to build more factories to make
advanced chips for use in premium smartphones like Apple's latest iPhone models
that use chips with 5-nanometer technology. A nanometer is just several atoms
wide.
Bernstein Research analyst Stacy Rasgon was confident Intel
could manage the roll out of investments to match demand going forward, and was
positive on expanding with government subsidies.
"(Intel) is using capacity as a strategic weapon ...
Part of the strategy right now is to go around the world and beg for
money," Rasgon said. "If there's any time to run around the world
begging for money to build semiconductor manufacturing facilities now is the
time."
Big Incentives
Germany has come out as the big winner by cornering the bulk
of Intel's investment but CEO Pat Gelsinger declined to say the amount of state
aid the company is getting 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 across suppliers and partners, it said.
Gelsinger said Intel wants to spend the remaining money from
its planned EUR 80 billion investment over the next 10 years to build out the
complete Magdeburg site and further develop the sites in Italy and France.
The company will invest an additional EUR 12 billion in an
existing Irish facility which will take its total investment in Ireland to more
than EUR 30 billion.
It is also in talks with Italy for a chip assembly and
packaging plant for a potential investment of up to EUR 4.5 billion (roughly
Rs. 37,678 crore), 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 advanced computing.
Gelsinger had 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 and woo the
chipmaker to invest in their countries.
Spreading its factories around different locations could
help the company get more subsidies from different countries.
But Intel will have to negotiate with each European country
where it's locating facilities for state aid, European Industry Commissioner
Thierry Breton told journalists.
He also said the Commission was talking with other chipmakers
and hoping to make similar announcements in the coming months, but did not
provide details. © Reuters