Intel investment fuels EU chips race with Asia

American chip-making giant Intel said on Tuesday it planned to invest tens of billions of euros in the European Union, as the continent seeks to reduce its reliance on semiconductors from Asia.

The project to boost the entire production process, from the research of new technologies to the manufacturing and packaging of semiconductors, could total up to 80 billion euros ($87.9 billion) over the next decade, the group said in a statement.

The production of the key technology, also known as chips, has become a strategic priority in Europe as well as the United States, after the shock of the pandemic choked off supply, bringing factories to a standstill and emptying stores of products.

The details of the announcement were hotly anticipated in Europe, where governments have been jostling to host new production facilities as the continent seeks to reduce its dependence on Asian chip imports.

Earlier this year the EU put forward the Chips Act, a 43-billion-euro plan to boost production on the continent of the component, used in everything from electric vehicles to wind turbines.

Speaking at the Intel launch event, European Commission President Ursula von der Leyen said the US group’s announcement was the “first major achievement” of the act.

The ambitious push sets the aim for the EU to make up 20 percent of global semiconductor production by 2030, roughly doubling its current market share.

– ‘Mega site’ –

Intel’s planned investments, spanning the EU, from Spain to Poland, “addresses the global need for a more balanced and resilient supply chain”, according to CEO Pat Gelsinger.

Semiconductors were “more critical than ever”, and the “brains powering essential digital technologies”, he said in a press conference.

The first phase of the plan would total 33 billion euros, the group said in a statement.

The cornerstone of the “landmark” investment was a 17-billion-euro “mega site” in the eastern German city of Magdeburg.

Intel plans to begin building the manufacturing hub in the “first half of 2023” with production to begin as soon as 2027 at the site employing 3,000 people.

Germany is already home to Europe’s densest network of semiconductor production, including groups such as Bosch or Infineon.

But the choice of Magdeburg over more established centres like Dresden came as something of a surprise, with the US group valuing the city’s strategic location at the crossroads between other European manufacturing centres across the country.

The project was “very important to assure security of supply in Europe and its technological development”, German Chancellor Olaf Scholz said in a statement in response to the announcement.

– Research centres –

The US group would also develop its research and development centre near Paris and a foundry design centre in France.

The new R&D base around Plateau de Saclay would in time employ 1,000 people, working on Intel’s “high performance computing (HPC) and artificial intelligence (AI) design capabilities”, the group said.

Intel would also hand a 12-billion-euro funding boost to its facilities in Ireland, while it said it had entered into negotiations with the Italian government to invest “up to 4.5 billion euros” in a manufacturing facility.

As part of the package, the chip-maker would also be expanding its lab capacity in Poland and developing joint centres with the Barcelona Supercomputing Center in Spain.

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