Intel offers to distribute $ 20 billion chip factory investments across the EU

U.S. chip maker Intel has said investment in the new $ 20 billion European semiconductor plant could be extended to several EU member states as it pressures to gain the bloc’s financial and political support in the project.

Pat Gelsinger, chief executive of the group, recently met with French President Emmanuel Macron and Italian Prime Minister Mario Draghi to discuss the global shortage of chips this has affected industries in Europe and beyond.

His visit followed EU signals that substantial quantities could be made available to help the bloc achieve a new goal of doubling semiconductor production to 20% of the world market by 2030, including the manufacture of the most advanced chips.

Speaking to the Financial Times, chip maker executives suggested there could be “EU-wide benefits” if Intel’s requirements for a new European manufacturing plant were met, increasing the possibility of spreading the facilities. And services to support chip production in several Member States.

“We could put manufacturing in one place and packaging in another,” said Greg Slater, Intel’s vice president of Global Regulatory Affairs, who is part of the team exploring the possibilities for expansion in Europe. Research and development could also be shared between EU countries, while spending with European suppliers would increase “drastically”.

“We are well placed to make this a whole ecosystem project, not just a couple of isolated paths in a member state,” he said. “We believe this is a project that will benefit Europe in general.”

In addition to financial support, Intel is looking for a site of approximately 1,000 acres with developed infrastructure, capable of supporting up to eight chip-making facilities, known as fabs, and with access to talent. Intel has analyzed countries such as Germany, the Netherlands, France and Belgium to explore the potential of a factory. A decision is expected by the end of the year.

Initially, two manufacturers would be established, at a total cost of about $ 20 billion for ten years of operation, he said. Over the life of the plant, the total investment could exceed $ 100 billion, Intel executives have reported.

French officials said Intel was trying to bring fairly advanced, or better, 10-nanometer chip technology to Europe. Discussions continued as to whether this would suit the needs of European customers, who currently rely on more mature technologies. “It takes a lot of money to position itself to follow the most advanced technologies,” an official said. “We’re seeing what’s feasible and what’s desirable.”

State aid will be crucial to ensure the competitiveness of the factory. “The disadvantage of the cost is 30 to 40 percent with Asia. . . and much of that is due to government support, ”Slater said.

However, Intel was not just looking for a brochure, French officials said. “They are seeing the ecosystem, the location of the place. . . It’s not just about what the states will give them in terms of money. It’s a complex set of factors. “

Intel said it also “took into account the value of being close to European customers that would place us in a better and stronger position to meet their growing demand.”

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

However, its ambition has raised concerns that Europe may be wasting money, given the high costs and complexity 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 substantial risks. “The question is whether it can ever be updated. It would be unfortunate if we followed a path that costs too much and we didn’t really solve the problem. “

Intel is investing $ 20 billion in two new factories in the US and another $ 7 billion to double the capacity of its plant in Ireland, as part of a multi-year strategy to catch up with Asian semiconductor giants TSMC and Samsung . It is also planning to bring the most advanced production of 7 nm chips to the Irish site, the group said.