Intel proposes to spread $20 billion fab over multiple European countries

When CEO Pat Gelsinger set out his new vision for Intel, he doubled down on the chip giant's manufacturing efforts. Intel has been struggling with advanced process technology for many years now. Intel used to be the world leader in semiconductor manufacturing, a title that now belongs to Taiwanese foundry TSMC. Intel dropped the ball with its 10nm process and had to delay its 7nm node too.

But Gelsinger doesn't want to give up. Rather than spinning off the fabs or outsourcing a lot more, Gelsinger is planning several new factories. Besides serving Intel's own demand, Gelsinger wants to give foundry services another shot too. Under the leadership of Brian Krzanich, Intel rolled out a foundry unit but this effort failed to pick up steam due to various limitations and Intel's struggles.

Geopolitical tensions and the COVID-19 pandemic have made chips a hot commodity. Both the US and the European Union have a desire to bring back chip production. Today, a lot of the world's semiconductor manufacturing happens in Asia, with most of the advanced production being concentrated in Taiwan and South Korea. The EU has set a goal to double its chip production to 20 percent of the global market by 2030, a target that will be hard to hit without attracting foreign foundries.

Intel considers spreading its fab over multiple EU states

Intel smells an opportunity here and is pandering to European leaders to get as many fiscal incentives as possible. Originally, Intel was planning to build a new $20 billion factory either in Germany or in the Benelux (Belgium, Netherlands, Luxembourg) region. Now there's a report from Financial Times that Intel is looking at the option of spreading its $20 billion semiconductor factory over a couple of EU member states. The key idea behind this plan seems to be to gain more financial and political support for the project.

In an effort to quell criticism about fiscal incentives, Intel's Greg Slater stressed that the chip giant is well placed to make this an "ecosystem-wide project" that will benefit Europe at large.

Talking to the Financial Times, the chipmaker’s executives suggested there could be “EU-wide benefits” if Intel’s requirements for a new European fabrication plant were met, raising the possibility of spreading the facilities and services to support chip production across multiple member states.

“We could put manufacturing on one site and packaging on another,” said Greg Slater, Intel vice-president of global regulatory affairs, part of the team exploring possibilities for expansion in Europe. Research and development could also be shared across EU countries, while spending with European suppliers would increase “dramatically”.

Intel is reportedly looking at a site of roughly 1,000 acres, enough room for up to eight chip fabs. Initially, the plan is to construct two factories, which will involve a total investment of $20 billion for 10 years of operation. Intel executives say the total lifetime investment of the new European plant could surpass the $100 billion mark. Previously, Intel hinted it would need 8 billion EUR of subsidies to make its European plans viable.