US-based semiconductor behemoth, Intel, has announced a colossal investment strategy aimed at re-establishing its ‘silicon empire’. Over the past few days, Intel’s disclosed investment plans in Europe have surged to $69bn.
Leading news outlets such as Bloomberg and Reuters reported on June 19 that Intel is set to construct semiconductor facilities in Germany, Israel, and Poland.
In a concerted bid to anchor its European operations, Intel is slated to invest €30bn in constructing two semiconductor fabrication plants in Magdeburg, Saxony-Anhalt, Germany. Ground-breaking is anticipated in H2 2023, with semiconductor production potentially operational by 2027. The facilities are set to bolster Intel’s in-house chip production capabilities and serve as its prime foundry production base in Europe. This investment is bolstered by a €10bn subsidy from the German government.
Simultaneously, a semiconductor fabrication unit is under development in Kiryat Gat, Southern Israel. In a televised address on June 18, Israeli Prime Minister Benjamin Netanyahu revealed Intel’s $25bn investment commitment, hailing it as the most substantial foreign capital investment in the country’s history. Israel is providing a 12.8% subsidy to lure Intel’s operations. The facility is also slated for completion by 2027.
Furthermore, Intel is investing $4.6bn in constructing a post-fabrication semiconductor packaging facility in Poland. This facility is anticipated to test and package semiconductors manufactured in Germany, with operations also planned to commence in 2027.
Intel’s aggressive investment strategy is bolstered by US and European policy shifts favouring domestic semiconductor production. Historically, semiconductor production bases have been relocated to Asia for cost-efficiency, but recent geopolitical issues have catalysed a push for onshoring in these regions. “We lost this industry to Asia,” Intel CEO Pat Gelsinger said in a Reuters interview. “We have to be competitive to get it back.”
Given the investment strategy proceeds as planned, by 2027, Intel will have semiconductor fabrication plants in three European countries – Germany, Ireland, and Israel – with backend facilities operating in Poland and potentially Italy. Intel is presently in negotiations with Italy regarding a state-of-the-art back-end manufacturing facility. The company is anticipating a synergetic effect between the German fab-Polish back-end process facility and the Israel fab-Italy back-end process facility, with each facility strategically located for easy transportation.
Lastly, Intel is extending its R&D efforts to France and Spain. In France, it plans to establish an R&D hub focusing on semiconductor design, high-performance computing (HPC), and artificial intelligence (AI). In Spain, it will expand supercomputer centre facilities. The specific investment scales for these two regions are yet to be announced.
