Republic faces competition from Germany and Italy for Intel investment

The Republic looks to be facing stiff competition from Germany and Italy in the race to secure a major new Intel investment.

Rome is drawing up an offer to try to convince Intel to invest billions of euros in an advanced chipmaking plant in Italy, as Germany emerges as frontrunner to land an even bigger megafactory planned by the US company, three sources said.

In September, Intel chief executive Pat Gelsinger indicated that the Republic was in line to secure some investment within the overall plan. The group has its European headquarters in Leixlip, Co Kildare, where it employs close to 5,000 people directly and a further 1,500 people indirectly. Earlier this year, the group said it would create another 1,600 roles in a separate $7 billion expansion.

The new plants Intel is planning would be part of a drive by the US group to build cutting-edge manufacturing capacity in Europe to help avoid future supply shortages of the kind currently crippling the automotive industry in particular.

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Rome is already in talks with Intel about the potential investment which, according to preliminary estimates, would be worth more than €4 billion, the sources who are involved in the discussions said. One of them said the total could even reach about €8 billion, depending on Intel’s plans.

Rome is ready to fund part of the overall investment with public money and offer favourable terms to Intel, including on labour and energy costs, the sources said. The factory would create more than 1,000 direct jobs in Italy, they added.

“The government is preparing a very detailed offer with the aim of clinching a deal by the end of the year,” one of the sources said.

“Discussions with Intel are at an advanced stage. There is no deal yet, but if the government works hard on this it has a good chance of bringing the plant to Italy.”

Potential sites include Turin's Mirafiori area, the Italian home of carmaker Stellantis, and Catania in Sicily, where French-Italian chipmaker STMicroelectronics already operates, the sources said.

Intel declined to comment on its plans.

Megafactory

The US group's biggest project in Europe is a planned megafactory, where Dresden in Germany has emerged as a leading candidate site, the sources said. They are not directly involved in talks about the choice of site for the megafactory. No final decision has been made for either site and plans could change in the coming weeks, the sources said.

The Italian factory would be an “advanced packaging” plant that uses new technologies to weave together full chips out of tiles produced by Intel and other chipmakers, the sources said.

Intel is using the technology to draw in new customers such as Amazon’s cloud computing unit, but its only sites are in the US.

France is also seen as contender for the megafactory, while Italy faces competition from Poland, where Intel also has a presence, for the packaging facility.

Mr Gelsinger said last month the company would announce the locations of two major new EU chip fabrication plants by year-end as it looks to spend €80 billion over the next decade on the continent.

The plans come as the European Union aims to reduce its dependence on semiconductor supplies from the United States and China, and the chip supply crisis shows no signs of abating.The group has said it will reserve capacity at its chip factory in Leixlip for carmakers and help them shift to using its technology, but that could take time.

Talks could speed up after a new government is formed in Germany, following September’s federal elections.

The EU’s biggest economy, with a large car industry, is in the lead to land the “megafab” plant, the sources said, though France remains in the running.

One of the sources said Italy also had “cards to play” to obtain a research centre, which is another part of the overall investment Intel is preparing for Europe. – Reuters