Intel’s European expansion will solidify future chip supply chain

Intel’s European expansion will solidify future chip supply chain

Intel’s announcement of plans to open two leading-edge semiconductor fabrication sites near Magdeburg, Germany, is a signal that the chipmaking giant plans to focus on safeguarding its supply chain against future geopolitical shocks.

The company said on Tuesday that it plans to break ground on the Magdeburg facilities in the first half of 2023, with chip production to begin in 2027. Intel will spend €17 billion (US$18.6 billion) on the new fabrication plants, as well as up to a further €16.5 billion on additional projects that include expansions of its existing fabrication facilities in the Republic of Ireland, a new R&D plant in France, and additional build-outs of several kinds of plants in Poland, Italy and Spain.

Intel expects the construction of the Magdeburg facilities to employ about 7,000 workers, and provide 3,000 new permanent jobs once they are both up and running.

According to Gartner vice president of emerging technologies and trends Gaurav Gupta, some of the expansion of Intel’s European presence was expected and had been in the works for some time — but other parts weren’t so widely predicted.

“Ireland and Germany are sort of different,” he said. “Ireland was sort of there in the long-term planning, but Germany is new, and I think the reason is that we’re seeing the current trend toward IC [integrated circuit] self-sufficiency.”

Government funding helps spur expansion

Intel’s announcements of European expansion plans come hard on the heels of news in January that the company plans to invest $20 billion in two new chip manufacturing plants in Ohio. Those US expansions are partially backed by the CHIPS for America Act, which passed as part of defense spending for the country’s fiscal 2021. The CHIPS Act provides $52 billion in funding for the expansion of the domestic semiconductor industry, and, according to a Gartner analysis, is a key factor in driving new investment in US chip fabs.

Copyright © 2022 IDG Communications, Inc.

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