US chip manufacturer Intel announces €33bn investment in Europe

Intel is third top chip manufacturer in the world. [Ascannio/Shutterstock]

The investment will support the establishment of a new mega fab in Germany, the expansion of an existing factory in Ireland, an R&D and design hub in France, and production and research capacities in Italy, Spain and Poland.

Intel CEO Pat Gelsinger unveiled the long-waited plan on Tuesday (15 March), specifying it is part of a broader strategy to invest a total of €80 billion in the next decade to strengthen the semiconductor value chain in the EU.

In February, the European Commission presented the European Chips Act, a legislative proposal to boost European semiconductor capacity with a relaxation of state aid rules to favour the establishment of state-of-the-art fabrication facilities, also known as first-of-a-kind.

“The EU Chips Act will empower private companies and governments to work together to drastically advance Europe’s position in the semiconductor sector,” Gelsinger said. “This broad initiative will boost Europe’s R&D innovation and bring leading-edge manufacturing to the region for the benefit of our customers and partners around the world.”

The investment is one of the largest from a private company in Europe in recent years. It marks a significant victory for Commission President Ursula von der Leyen and internal market commissioner Thierry Breton, who have thrown their political weight in support of the Chips Act.

Critics pointed to the fact that the Chips Act only the largest EU countries that would have enough resources to attract private investments. Intel’s plan is mainly targeting large member states, but the investment is spread across different countries.

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The most important part of the investment is the two first-of-their-kind facilities that Intel will build in Magdeburg, Germany. In the Chips Act, first-of-a-kind mean fabrication plants that significantly advance Europe’s technological status and will therefore enjoy a privileged legal regime in terms of state aid.

The German hub has been nicknamed ‘Silicon Junction’ as it connects the different innovation and manufacturing centres across the EU. Intel estimates 3,000 high-tech jobs will be created as a result, without counting the spillover effect on suppliers and partners.

The facilities will produce Intel’s latest generation of chips and offer foundry services producing semiconductors also for other companies, consistently with the Commission’s idea of ‘Open Foundries’.

The construction work is expected to start in 2023, and the fabs should become operational in 2027.

“The first-of-its-kind fab site in the EU would help rebalance global silicon capacity and create a more resilient supply chain,” said German Chancellor Olaf Scholz in a statement.

Intel plans billion-euro investment in next-generation microchips on EU soil

With investments amounting to 80 billion euros, Intel wants to massively expand its production facilities in Europe, focusing on next-generation microchips measuring two nanometres and smaller than that.

The American company will also expand its facility in Ireland with a €12 billion investment meant to double the manufacturing space to bring advanced chips and strengthen the offer of foundry services in Europe.

Intel is also negotiating with the Italian government to open a first-of-a-kind facility for back-end manufacturing, namely, where chips are finalised via high-precision processes. This facility is expected to employ 1,500 people directly and generate more than double the jobs in the supply chain.

The investment in Italy is linked to the planned acquisition of Tower Semiconductors, a foundry company that has a partnership with STMicroelectronics, a Franco-Italian semiconductor manufacturer with a fab in Agrate, near Milan.

Earlier this month, the European Investment Bank announced a €600 loan to STMicroelectronics for R&D investments in three facilities, including Agrate. The investment is expected to set up ‘pilot lines’, a concept introduced in the Chips Act to define facilities specialised in testing prototypes and scaling up innovative products.

As the fabs in Italy and Germany are first-of-a-kind, Intel has been negotiating to receive public funding from the national governments, but the actual amount is not public. Negotiating the financial support is probably the main reason for Intel taking so much time to finalise the investment plan, in the making since March 2021.

Leading chip-maker answers EU call to scale up European capacity

Intel, the world’s largest manufacturer of semiconductor chips, will open a foundry plant for cutting-edge semiconductors in Europe in a bid to diversify its global supply chain.

Intel is also planning to open an R&D hub in France’s Plateau de Saclay, just outside Paris, with 1,000 high-tech jobs expected by 2025. In addition, the chipmaker will open in France its main European foundry design centre.

“France will become Intel’s European headquarters for high-performance computing and AI design capabilities, benefiting a broad set of industry sectors,” Gelsinger added.

In Poland, the plan is to expand the laboratory space by 50% in 2023 to develop semiconductor solutions for AI-based deep neural networks, audio, graphics, data centres and cloud computing.

In Spain, the company plans to expand its ongoing collaboration with the Barcelona Supercomputing Centre to establish new laboratories on advanced computing.

In these cases, member states are likely to use the General Block Exemption Regulation, which exempts R&D aid from the regular EU’s state aid rules.

EURACTIV understands that more projects from other semiconductor companies are also in the making.

[Edited by Nathalie Weatherald]

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