Intel offers to spread $20bn chip factory investment across EU

Investment in Intel’s planned $20 billion (€17 billion) new European semiconductor factory could be spread across several EU countries as it lobbies to win the bloc’s financial and political support for the project.

The Financial Times reports that the group’s chief executive, Pat Gelsinger, recently met French president Emmanuel Macron and Italian prime minister Mario Draghi to discuss the global chip shortage that has hit industries around the globe.

Mr Gelsinger’s visit followed signals from the European Union that substantial sums could be made available to help the bloc meet a new target to double semiconductor production to 20 per cent of the global market by 2030, including making the most advanced chips.

Intel is investing $20 billion in two new factories in the US and a further $7 billion (€5.9 billion) to double the capacity of its Leixlip plant in Co Kildare, as part of a multiyear strategy to catch up with semiconductor giants TSMC and Samsung, the Financial Times reports.

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The chipmaker is also planning to bring its most advanced 7 nanometre (nm) chip production to its Leixlip site.

Its executives suggested there could be “EU-wide benefits” if the company’s requirements for a new European fabrication plant were met, raising the possibility of spreading the facilities and services to support chip production across the EU.

Greg Slater, Intel vice-president of global regulatory affairs, who is part of the team exploring possibilities for expansion in Europe told the Financial Times, “We could put manufacturing on one site and packaging on another.” Research and development could also be shared across EU countries, while spending with European suppliers would increase “dramatically”.

He said the company is “well placed to make this an ecosystem-wide project, not just a couple of isolated paths in one member state. We do believe that this is a project that will benefit Europe at large”.

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As well as financial support, the Financial Times reports Intel is looking for a site of about 405 hectares (1,000 acres) with developed infrastructure, with capabilities to support up to eight chip fabrication facilities, known as fabs, and which has access to talent.

Germany, the Netherlands, France and Belgium are among the countries Intel is exploring for a potential factory and a decision is expected by the end of the year.

Mr Slater said that initially two fabs would be established at a total cost of some $20 billion for 10 years of operation. Over the lifetime of the plant, total investment could top $100 billion (€84 billion), Intel has said.

French officials said Intel was looking at bringing fairly advanced 10nm chip technology, or better, to Europe. Discussions continued over whether this would suit the needs of European customers, who currently rely on more mature technologies.

“It takes a lot of money to position yourself to go on the most advanced technologies,” an official told the Financial Times. “We are looking at what is feasible and what is desirable.”

State aid will be crucial to ensuring the factory’s competitiveness. “The cost disadvantage is 30 to 40 per cent with Asia and a lot of that is due to government support,” Mr Slater said.

However, Intel was not just looking for a handout, French officials said. “They are looking at the ecosystem, the location of the site. It’s not just a question of what the states will give them in terms of money. It’s a complex set of factors.”

Intel said it was also “factoring in the value of being near European customers that would put us in a better and stronger position to meet their growing demand”.

Thierry Breton, Brussels commissioner for the single market and in charge of industrial strategy, has said Europe should aim eventually to produce the most advanced 2nm chips.

However, his ambition has raised concerns that Europe could be wasting money, given the high costs and complexities of producing advanced semiconductors.

Jacob Wallenberg, one of Europe’s most respected industrialists, told the Financial Times that while he understood the ambition, there were many risks. “The question is whether you can ever catch up. It would be unfortunate if we went down a path that costs too much and didn’t really solve the problem.”