Chip manufacturer Intel is increasingly flirting with a plan to build new factories in Europe. In doing so, the company is responding to a wish from the European Commission. The corona crisis and geopolitical tensions have forced Europeans to face the facts: the dependence on the US and especially Asia is too great, more chips need to be made in Europe.
Intel CEO Pat Gelsinger said on Tuesday at the Munich car fair that the company is willing to invest up to 80 billion euros over the next ten years. He also promises that at least two new factories will be built. In the summer, the company first discussed such plans.
But why does Intel find Europe so interesting and is Intel just as interesting for the European market?
Match or no match?
Intel is looking for growth markets, says professor of chip design Bram Nauta (University of Twente). He thinks Intel and Europe could be a good match. “Computer chips are becoming increasingly important in the automotive industry. Then it is useful for Intel to be close to customers in Europe.”
But not everyone is convinced that it is interesting for both. “You could question whether it is just as useful for Europe as it is for Intel,” says professor of chip design Kofi Makinwa (TU Delft). According to him, Intel factories in Europe will only partly produce for the European market.
“The bulk of the chips in cars are used for safety, engine management and infotainment,” says Makinwa. “You don’t need the latest chips for that.”
While those are the chips that Intel focuses on. He expects that with the continued development of autonomously driving cars, more computing-powered chips will be needed, but that will still only be a limited part of the whole.
Intel’s plans are emerging while there is a major chip shortage worldwide, which also affects the auto industry. Nauta warns that the chip manufacturer’s plans for Europe will do little to solve the current shortages, because it takes two to three years before such a factory is up and running.
Billions of euros
The question now is whether EU countries want to house such a factory, and at what price. It is unclear what conditions Intel will attach to its investment. It is probably counting on billions of euros in the form of subsidies or tax benefits.
This summer, Intel CEO Gelsinger was engaged in a charm offensive: he visited governments in France, Belgium, Italy, Germany and the Netherlands. There he discussed, this is how he wrote on Twitter at the end of June, “the importance of chip production”. A decision on where it will be will be made at the end of this year, according to the Financial Times.
According to Makinwa, various countries have a chance. He explains that an ecosystem of suppliers is needed around such a production location in order to actually make the chips. Intel already has that in Ireland. Other European countries – including the Netherlands – may also be an option.
View here which countries according to Professor Makinwa are eligible for an Intel production location:
A source with knowledge of the contacts between the Dutch government and the group confirms that there is interest from both sides, but emphasizes that the plans for a production location are still under development and there is no proposal on the table yet.
Professor Makinwa wonders whether it is smart to support such a large American player with a bag of money. “I would choose to help European players, such as NXP, Infineon and STMicroelectronics.”
The Ministry of Economic Affairs says in a response that it is following Intel’s ambitions with great attention, and that it will wait further. Intel could not be reached for comment despite repeated attempts. When asked, the European Commission does not want to comment on Intel’s plans.