Intel wants $10 billion to set up factory in Germany or Benelux

Both the US and Europe have a desire to become more self-sufficient in terms of chip production. Over the past couple of decades, a lot of chip manufacturing capacity concentrated in Asia, and this is now increasingly seen as a geopolitical risk.

Intel wants $10 billion to make manufacturing in the EU competitive enough

Intel recently expressed interest in building a new factory in Europe and now there are some details about what the chip giant has in mind. Intel CEO Pat Gelsinger revealed the company is interested in building a new megafab in Germany or the Benelux (Belgium/Netherlands/Luxemburg) region. However, there is one big catch. Reuters reports Intel is demanding that politicians make it more competitive to set up shop. Basically, Intel is saying to US and EU officials that a lot of money will be needed to make manufacturing competitive versus setting up shop in Asia.

Reuters reports Gelsinger wants 8 billion euros in subsidies from the EU:

Intel wants 8 billion euros ($9.7 billion) in public subsidies towards building a semiconductor factory in Europe, its CEO was quoted as saying on Friday, as the region seeks to reduce its reliance on imports amid a shortage of supplies.

The pitch is the first time Pat Gelsinger has publicly put a figure on how much state aid he would want, as Intel pursues a multibillion-dollar drive to take on Asian rivals in contract manufacturing.

“What we’re asking from both the U.S. and the European governments is to make it competitive for us to do it here compared to in Asia,” Gelsinger told Politico Europe in an interview.

EU considers alliance with STMicroelectronics, NXP, Infineon, and ASML

On a related note, Reuters reports EU officials are considering to set up an alliance with various EU-based companies, including STMicroelectronics, NXP, Infineon and ASML. This potential deal would either complement or be seen as an alternative to a foreign-funded factory, like the one Intel is pitching.

The plan, which is at a very preliminary stage, may include a pan-European scheme known as an Important Project of Common European Interest (IPCEI), which allows EU governments to pump in funding under easier state aid rules, and companies to work together on the entire project, the sources said.

The EU wants to double the trading bloc's marketshare in semiconductors to 20 percent by 2030. European internal market chief Thierry Breton talked with Intel CEO Pat Gelsinger this week and will also hold a video conference with Maria Marced, President of TSMC Europe. TSMC is reportedly not interested in building a factory in the EU.

Reuters' report indicates not all EU officials are convinced by the plan and hints that France is not a big fan of a foreign-funded plant. One of the questions being raised is whether the European internal market, which lacks a big smartphone or electronics industry, could absorb the additional output of the proposed fabs.