Intel to Invest at Least $19 Billion for New Chips Plant in Germany

Intel on Tuesday selected the German city of Magdeburg for its next major chip manufacturing site, continuing the dramatic expansion with the aim of reducing reliance on Asian factories for key components.

The Silicon Valley company said it expects to build at least two semiconductor factories in the East German city worth about 17 billion euros, about $ 19 billion, reflecting plans announced in late January to begin production in Ohio for the first time. As it did in Ohio, Intel said the Magdeburg site, with other investments in France, Ireland, Italy, Poland and Spain, could raise about $ 90 billion in a decade to build additional factories.

The German site construction is expected to employ about 3,000 permanent workers with 7,000 workers.

Intel’s move is the latest response to a persistent shortage of semiconductors, initially fueled by an epidemic that has plagued automakers and other companies in Europe and the United States. The supply chain crisis underscored consumers’ reliance on chip makers for the most advanced products, especially in Taiwan and South Korea.

Patrick Gelsinger, who became Intel’s chief executive a year ago, has set a goal of increasing the US share of global chip production to about 30 percent over the next decade, up from 12 percent today. It also said it wanted to increase Europe’s share from 9 per cent to about 20 per cent over the same period.

Mr. Gelsinger said in a statement. “We are committed to playing a vital role in shaping Europe’s digital future for decades to come.”

The announcement would be welcome news for EU policymakers who recently announced about $ 17 billion in public and private investment in the chip sector by 2030. The proposal would add about $ 34 billion to already planned public investments.

In the United States, Mr. After announcing the Ohio investment, Gelsinger was invited to address President Biden’s State of the Union address. In Congress, lawmakers are debating a package that includes $ 52 billion incentives for the semiconductor industry, a version of which passed the House in early February after being approved by the Senate last June. The two versions should be settled in the negotiations between the two chambers of Congress.

Mr. Gelsinger argues that government subsidies are important in bringing the cost of building new factories in line with the cost of setting up plants in Asia. He has lobbied officials in the United States and Europe for parallel subsidy packages that could include grants to set up new chip factories, saying government support could determine how fast and how fast Intel expands in both regions.

At the same time, Mr. Gelsinger and other Intel officials have been in talks with officials in at least seven European countries about a possible new site. Intel now has factories in Ireland and Israel, in addition to Arizona, Oregon and New Mexico.

Germany seemed to be a strong candidate, partly because of the concentration of automakers that have become major customers for chip makers. Mr. Gelsinger spoke at the Auto Industry Trade Show in Munich in September, in which Intel’s mobile highlighted the unit’s driver-assisted technology and posted a photo fist-bumping with then-Chancellor Angela Merkel.

The country is no stranger to chip manufacturing. One major manufacturing hub is Dresden, where Infineon, GlobalFoundries and Bosch operate semiconductor factories. Magdeburg is in the state of Saxony-Anhalt, about 150 miles northwest of Dresden and 100 miles west of Berlin.

“The two semiconductor factories by Intel in Magdeburg are an important and strong impetus for the economy in difficult times and a central leap forward for Europe’s digital sovereignty,” said Robert Hebeck, Germany’s economy minister.

In addition to the German factory, Intel said it would spend an additional € 12 billion to double its production space in Lexlip, a city west of Dublin. In Italy, the company said it was in talks to build a manufacturing facility with a potential investment of € 4.5 billion and about 1,500 jobs.

In France, Intel said it would create a new research and development hub, creating 1,000 new jobs. In Poland, Intel is expanding lab space.

Intel said it has been operating in the European Union for 30 years and currently employs about 10,000 people in 27-nation blocs.

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