Intel Corp. has decided on a location for its European fab in the east German city of Magdeburg.
In July 2021, Intel announced it was looking to invest some $100 billion in multiple chip manufacturing facilities spread across multiple regions in Europe. The multifaceted plan began with Intel finding a location to spend $20 billion on semiconductor manufacturing with the potential to build six additional phases for fabs.
According to Reuters, Intel will make the decision public later this week on the multi-billion euro European semiconductor factory. Germany has been on the list of potential locations with local government in Bavaria and Dresden, tempting not just Intel but also Taiwan Semiconductor Manufacturing Co. (TSMC), which has been in talks to build a facility in Germany.
One of the tipping points for choosing a location may have been the announcement of the European Chips Act, which would provide somewhere close to $50 billion to entice manufacturers to build new semiconductor factories in the region and giving these companies subsidies.
The act is similar to the Creating Helpful Incentives to Produce Semiconductors (CHIPS) for America Act, which would provide more than $50 billion for similar efforts in the U.S.
Intel has been extremely active in the past year with announcements that it would build two new fabs in Arizona, where it broke ground in September 2021, and more recently, the announcement this January that the company would build two other fabs in Licking County, Ohio. For both investments, Intel said it would be spending somewhere around $20 billion at each location.
Reuters said that Intel is also considering other locations in Europe to build further facilities in maybe France or Italy, depending on incentives and subsidies those countries would offer.
The move to increase its semiconductor manufacturing comes at a time when Intel wants the U.S. to eventually manufacture one-third of the world’s total semiconductors.
According to the Semiconductor Industry Association (SIA), the U.S. currently manufactures about 12% of all chips made globally. If the supply chain remains the same or the situation worsens, this will more than likely decline to 10% or less in the coming years as more manufacturing capacity is built in other countries to meet demand.
As COVID-19 created numerous supply chain issues, causing a global semiconductor shortage, Intel has led the charge to not just beef up its own semiconductor manufacturing but to create a foundry business to support other fabless companies that have difficulties meeting demand. Intel also recently acquired Tower Semiconductor to further its foundry goals.
The idea is that aggregation of chip manufacturing in Taiwan, China and Korea may become a future problem if another pandemic breaks out or geopolitical issues cause disruptions. If Intel and other companies can provide more regional-based manufacturing, the impact could be lessened.