Intel still planning European chip plants despite delay

Intel still planning European chip plants despite delay

The Intel Corporation logo is seen on a display in a store in Manhattan, New York City, U.S. November 24, 2021. REUTERS Andrew Kelly File Photo

BERLIN STOCKHOLM, January 21, Reuters - Intel still intends to develop European chip manufacturing capacity despite the delay in its plans to invest more than $20 billion in two new U.S. semiconductor plants.

The company said in September it could invest as much as 95 billion dollars in Europe over the next decade and announce the locations of two major new European chip manufacturing plants by the end of 2021.

Despite missing the deadline, Chief Executive Patrick Gelsinger told Reuters on Friday that European factory plans were still on the cards and the company would announce the chosen manufacturing sites in the coming months.

He said that we are a say-do company. I hope the European Union finishes their chips act and I would hope to follow that shortly with our next major announcement in Europe. The European Chips Act aims to reduce the continent's dependence on Asian suppliers for advanced semiconductors by subsidising the development of large chip factories.

Industry analysts expect the legislation to pass later this year, and the European Commission will propose it in early February. European automakers have had to cut production due to a global chip shortage.

Intel has been in talks with governments, including in Germany and Italy, as it seeks a European location, and Gelsinger said the US chipmaker is still expected to develop a multi-fabrication site.

He said that they haven't quite sized their dimensions exactly, how big or bold we are going to be at this point in time.

Intel plans to build a massive new manufacturing site near Columbus, Ohio on Friday and plan to invest up to $100 billion to make it potentially the world's largest chip-making complex. With the Ohio site, pressure on Intel to locate a site in Europe could have been reduced, according to Alan Priestley, Gartner chip analyst.

Germany is the top of the list of potential hosts, with the local governments of Penzing in Bavaria and Magdeburg and Dresden in eastern Germany trying to tempt Intel. In December, the mayor of Penzing told Reuters he had not heard back from the company.

Ondrej Burkacky, a senior partner at McKinsey, said that any additional capacity would need to be built out now, as it can take three to four years for a chip factory to reach a significant output level.