Intel seeks €8bn in subsidies for European chip plant

Chip manufacturer eyes Germany and Benelux states for potential semi-conductor factory

Intel is pursuing a multibillion-dollar drive to take on Asian rivals in contract manufacturing.

Intel is pursuing a multibillion-dollar drive to take on Asian rivals in contract manufacturing.

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Intel wants €8 billion in public subsidies towards building a semi-conductor factory in Europe, its chief executive was cited as saying on Friday, as the region seeks to reduce its reliance on imports amid a shortage of supplies.

The pitch is the first time Pat Gelsinger has publicly put a figure on how much state aid he would want, as Intel pursues a multibillion-dollar drive to take on Asian rivals in contract manufacturing.

“What we’re asking from both the US and the European governments is to make it competitive for us to do it here compared to in Asia,” MrGelsinger told Politico Europe.

Politico cited Mr Gelsinger saying that he was seeking roughly €8 billion in subsidies. The company later distanced itself from the report, saying he had not given a specific figure, although he had made it clear that EU leaders needed to invest to ensure a vibrant semi-conductor industry.

Mr Gelsinger, on his first European tour since taking charge, met European commissioner for the internal market Thierry Breton in Brussels on Friday. The visit followed the launch of a plan for Intel to invest $20 billion in chip production in the United States.

On top of that, Mr Gelsinger is prospecting for a location for a plant in Europe that he says would back Mr Breton’s goal of doubling the region’s share of global chip output to 20 per cent over the next decade.

Mr Breton held talks earlier on Friday with Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world’s biggest chip maker ahead of Korea’s Samsung and Intel.

Mr Breton described his meeting with Intel’s Gelsinger as an “in-depth discussion”, while a video call with Maria Marced, president of TSMC Europe, had been a “good exchange”.

To meet current and future semi-conductor industry demand, Europe will drastically increase production capacity, both on its own and through selected partnerships to ensure security of supply, said Mr Breton.

TSMC said the talks with Mr Breton demonstrated its commitment to the region. “Our desire to support our customers as fully as possible means that we’re always willing to establish open communications with governments and regulators wherever they, and we, are based,” said the company.

The commission said Mr Breton would hold further talks with the chief executives of two Dutch semi-conductor players: ASML, the leading maker of semiconductor lithography tools, and with chip maker NXP.

Recent disruption to semi-conductor supply chains has added urgency to efforts to reduce import dependency, yet analysts caution Europe’s shrunken technology base means it doesn’t offer a viable market for a leading-edge plant.

Industry and diplomatic sources say that, of the big three chip makers, Intel is the only one so far to express concrete interest in Mr Breton’s goal of producing the most advanced chips in Europe.

Mr Breton’s drive to attract a major foreign chip maker has unnerved home-grown players, and he is also discussing the creation of a European semiconductor alliance that would bundle their interests.

Germany’s Infineon said on Friday it welcomed Mr Breton’s initiative to strengthen chip production in Europe.

“As financial resources are naturally limited it is important to discuss most urgent needs and the most reasonable ways of investment,” said Infineon.

German visit

Mr Gelsinger, who met economy minister Peter Altmaier and Bavarian governor Markus Soeder on the German leg of his European tour, was quoted as saying Germany would be a suitable location for a potential European foundry.

“Geopolitically, if you’re in Europe, you want to be in continental Europe,” he told Politico, in remarks echoed in a second interview with German business daily Handelsblatt.

“We think of Germany as a good candidate . . . for where we might build our fabrication capabilities,” he said, also indicating interest in the Benelux countries. – Reuters

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