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Friday, May 20, 2022

Europe kept waiting while Intel builds new chip factories in the US

BERLIN/STOCKHOLM — Intel remains committed to developing chip manufacturing capacity in Europe, even though delayed plans were overshadowed by its announcement Friday of more than $20 billion in investment in two new US semiconductor manufacturing plants.

In September, the company said it could invest up to $95 billion in Europe over the next decade and would announce the location of two major new European chip factories by the end of 2021.

Although the deadline has been missed, CEO Patrick Gelsinger told on Friday that plans for European factories are still on the table and the company will announce selected manufacturing sites in the coming months.

“We are a company that says do it,” he said. “I hope the European Union ends its chip business and we hope to follow suit soon with our next major announcement in Europe.”

The European Chip Act aims to reduce the continent’s dependence on Asian suppliers of advanced semiconductors by subsidizing the local development of large chip factories.

The European Commission will propose legislation in early February and industry analysts expect it to be passed later this year. The issue is relevant as a global shortage of chips has forced European automakers to cut production.

Intel is in talks with governments, including those in Germany and Italy, as it looks for a European location, and Gelsinger said the US chip maker is still looking to build a multi-site.

“Also, we didn’t quite accurately estimate our size, how big or bold we are going to be at this point in time,” he added.

On Friday, Intel laid out plans to build a major new manufacturing facility near Columbus, Ohio, with plans to invest up to $100 billion to make it potentially the world’s largest chip fabrication complex.

Gartner chip analyst Alan Priestley said that with the addition of the Ohio site, the pressure on Intel to locate a site in Europe could be reduced.

Germany tops the list of potential hosts, and the local governments of Penzing in Bavaria and Magdeburg and Dresden in eastern Germany are trying to seduce Intel. In December, the mayor of Penzing told that he had not received a response from the company.

Ondřej Burkacki, senior partner at McKinsey, said any additional capacity would need to be ramped up now, as it could take three to four years for a chip factory to reach significant production levels.

Nadine Shimrosik and Supant Mukherjee

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