Intel has on Tuesday confirmed the worst kept secret in the tech industry, with the news it will build a chip factory in Germany.

It was reported earlier this month that Intel had opted for the east German city of Magdeburg as the location of its new multibillion-euro European chip factory.

Now Intel in its announcement has officially confirmed it will invest an initial 17 billion euros into a leading-edge semiconductor fab mega-site in Magdeburg, and will also create a new R&D and design hub in France. In addition to all this, Intel will invest in R&D, manufacturing and foundry services in Ireland, Italy, Poland and Spain.

EU investment

This is the first phase of Intel’s plan to invest as much as 80 billion euros in the European Union over the next decade.

In September 2021 CEO Pat Gelsinger said Intel could potentially invest as much as 80 billion euros ($95bn or £69bn) to expand chip production in Europe.

“With this landmark investment, Intel plans to bring its most advanced technology to Europe, creating a next-generation European chip ecosystem and addressing the need for a more balanced and resilient supply chain,” said the chip giant on Tuesday.

“Our planned investments are a major step both for Intel and for Europe,” said Gelsinger. “The EU Chips Act will empower private companies and governments to work together to drastically advance Europe’s position in the semiconductor sector.”

This caters for the chip ambitions of the European Commission.

Back in March 2021 the European Union under its 2030 Digital Compass plan announced it wanted to produce at least 20 percent of the world’s cutting-edge semiconductors by the end of the decade.

To help achieve this goal, the European Commission in February this year officially proposed easing state aid rulings to help countries offer financial incentives for the building of chip factories.

The proposal, known as the ‘European Chips Act’, was touted as a way to bolster Europe’s self sufficiency in the semiconductor sector, by easing state aid rules, improving tools to anticipate shortages and crisis, and strengthen research capacity in the bloc.

“This broad initiative will boost Europe’s R&D innovation and bring leading-edge manufacturing to the region for the benefit of our customers and partners around the world,” said Intel’s Gelsinger. “We are committed to playing an essential role in shaping Europe’s digital future for decades to come.”

Intel for its part has not been exactly shy in enticing European officials to pledge monies to subsidise building the chip factory.

Indeed, Pat Gelsinger in March 2021 stated Intel was seeking 8 billion euros (£7bn) in public subsidies for its planned semiconductor plant in Europe.

Silicon Junction

Intel on Tuesday also took the time to open up about its supply chain plans for the EU, and its intention to create manufacturing capacities for ‘made in Europe’ chips.

“The investment program is centered around balancing the global semiconductor supply chain with a major expansion of Intel’s production capacities in Europe,” Intel said. “In the initial phase, Intel plans to develop two first-of-their-kind semiconductor fabs in Magdeburg, Germany, the capital of Saxony-Anhalt.”

It said planning will start immediately, with construction expected to begin in the first half of 2023 and production planned to come online in 2027, pending European Commission approval.

The new fabs are expected to deliver chips using Intel’s Angstrom-era transistor technologies.

Intel said Germany was an ideal place to establish a new hub for advanced chipmaking, and it plans to initially invest 17 billion euros, creating 7,000 construction jobs over the course of the build, 3,000 permanent high-tech jobs at Intel, and tens of thousands of additional jobs across suppliers and partners.

Intel plans to refer to the new site as the Silicon Junction, connecting technology.

This Silicon Junction will serve as the connection point for other centres of innovation and manufacturing across the country and region.

Intel is also continuing to invest in its Leixlip, Ireland, project, spending an additional 12 billion euros and doubling the manufacturing space to bring Intel 4 process technology to Europe and expand foundry services.

Once complete, this expansion will bring Intel’s total investment in Ireland to more than 30 billion euros.

In addition, Intel and Italy have entered into negotiations to enable a state-of-the-art back-end manufacturing facility. With a potential investment of up to 4.5 billion euros, this factory would create approximately 1,500 Intel jobs plus an additional 3,500 jobs across suppliers and partners, with operations to start between 2025 and 2027.

This would be in addition to the foundry innovation and growth opportunities Intel expects to pursue in Italy based on its planned acquisition of Tower Semiconductor.

Tower has a significant partnership with STMicroelectronics, which has a fab in Agrate Brianza, Italy.

In total, Intel plans to spend more than 33 billion euros on these manufacturing investments.

Tom Jowitt

Tom Jowitt is a leading British tech freelancer and long standing contributor to Silicon UK. He is also a bit of a Lord of the Rings nut...

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