Intel has unveiled a multibillion-euro spending spree in Germany as part of nearly £50bn in microchip investments across Europe and Israel announced just days apart.
The €30bn (£26bn) in new funding, agreed in exchange for an offer of €10bn in subsidies from Germany’s Chancellor, Olaf Scholz, will pay for a “megafab” – a vast semiconductor factory – in the city of Magdeburg. The fab will aim to be operational within four years.
The US technology company on Sunday also lifted the lid on a $25bn (£19.5bn) investment in a new chip plant in Israel, as well as a $4.6bn deal in Poland.
Germany’s offer of lavish state support comes weeks after British officials confirmed a £1bn strategy, spread over 10 years, to bolster semiconductor investment in Britain.
The long-delayed UK semiconductor strategy received a lukewarm response from industry, with one executive describing it as “frankly quite flaccid”.
Europe has rolled out the red carpet for the semiconductor sector, offering billions of euros in subsidies to attract investment from the industry’s biggest companies.
In 2021, Pat Gelsinger, Intel’s chief executive, decided against Britain for the company’s new semiconductor factories after Brexit. He told the BBC at the time that the UK “would have been a site that we would have considered”, but “post-Brexit … we’re looking at EU countries and getting support from the EU”.
On Monday, the Intel boss said the tech giant planned to build a “Silicon Junction’’ in Magdeburg. He said the facility was a “critical part of our strategy for Intel’s growth”.
“Combined with last week’s announcement of our investment in Wroclaw, Poland, and the Ireland sites we already operate at scale, this creates a capacity corridor from wafers to complete packaged products that is unrivalled,” he said.
The announcement comes after months of talks between Intel and German officials as the US giant demanded further support from Berlin, blaming inflation.
The project is now valued at €30bn, up from €17bn last year, due to increased scope and rising costs.
Mr Gelsinger said: “We’re grateful to the German federal government, Chancellor Olaf Scholz and the government of Saxony-Anhalt for their partnership.”
Mr Scholz said he hoped Germany would become “one of the world’s major semiconductor production locations”.
The German government is expected to provide €10bn in subsidies to Intel, up from a previously agreed €6.8bn.
The handouts have proved controversial in Germany and caused a rift within the government. The Süddeutsche Zeitung newspaper criticised the “unbelievable amount of subsidies” that involves “one million euros” given away for each new job.
TSMC, the Taiwanese semiconductor giant, has also been considering a European factory worth billions of pounds as part of its expansion plans.
Germany already has a significant semiconductor industry of its own, with domestic companies such as Infineon, and engineers with key technology skills. The chip industry is also relied on by its huge domestic car sector.
Ron Black, chief executive of semiconductor company Codasip, said: “The EU is the natural destination for Intel because they have rich government grants, a lot of resources for fabs, an experienced workforce and natural customers.”
Mark Dickinson, chief executive of UK semiconductor start-up Intrinsic, which has been spun out of University College London, said Britain’s semiconductor strategy now appeared “woefully underfunded when compared to other nations”.
“The recent announcements by Intel on manufacturing investments in the European Union, coming on the back of the EU’s own substantial Chips Act investment, demonstrate how seriously the US and the EU are taking semiconductor manufacturing,” he said.
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Source: https://finance.yahoo.com/news/britain-sidelined-intel-goes-semiconductor-185258475.html