Intel Targets Supply Chain With $87.8B Europe Expansion Plan

The silicon giant will expand its footprint massively in Europe with facilities in Germany, Ireland, Poland and Spain. It will spend $36.2 billion (33 billion euros) on sites in Germany and Ireland to start. Meanwhile, partners hail the investment.

Spurred by a global supply chain crisis that hit the semiconductor space especially hard, Intel on Tuesday announced an $87.8 billion (80 billion euro) investment plan over a decade for massive manufacturing projects across Europe.

The Santa Clara, Calif.-based tech giant will build facilities in Germany, Ireland, Italy, Poland and Spain over the next decade with plans to hire more than 3,000 high-tech workers and more than 7,000 construction workers. Phase 1 will start in 2023 with an $18.6 billion (17 billion euro) semiconductor site in Magdeburg, Germany, nicknamed the “Silicon Junction.” The first phase will also include a 12-billion-euro facility in Ireland. This spending will complement the company’s U.S. effort, which has it investing another $20 billion on two chip manufacturing plants in Ohio.

The European spending spree will be spread out over a decade and will include projects in France, Italy, Poland, and Spain to expand research and development, packaging operations, and manufacturing foundry services. In Italy, Intel will spend $4.9 billion (4.5 billion euros) building a backend manufacturing factory that would create about 1,500 jobs. In France, an R&D hub will be built with 1,000 new employees by the end of 2024. In Poland and Spain, Intel plans on increasing existing lab space to develop deep neural networks, audio graphics, data center and cloud computing.

Intel CEO Pat Gelsinger said the investments are crucial to keeping up with global demand and making sure the supply chain keeps moving. With more than 80 percent of the world’s semiconductor supply produced in Asia, the company wants to avoid another supply chain bottleneck like the one seen during the past two years of the global pandemic. “The world has an insatiable demand for semiconductors,” he said. “As the world is becoming digital, chips are more critical than ever. They are the brains powering essential digital technologies for everything from education, business and medicine, to transportation, defense and infrastructure.”

The COVID-19 pandemic forced lockdowns in Asia that sent a ripple effect through the supply chain for the past two years. While PC shipments have been at a record high because of pandemic-created demand, many channel partners have faced the stress of supply chain woes. “Demand for semiconductors has grown and supply has diminished due to a disruption in our global supply chain,” Gelsinger said. “Many industries are at a standstill because they do not have enough chips. The recent chip shortage has reminded us of the risks of being too dependent on any one region in the short term.”

European Commission President Ursula von der Leyen joined in on the announcement, touting the commission’s plan to have 20 percent of the world’s microchips produced in Europe, twice what is produced there now. “I want Europe to cross New Frontiers in innovation, breaking the three nanometers node barrier, for example; creating energy efficient chips, and also developing new technologies, new products and applications that our minds can’t even conceive today.”

The European Union has pledged more than $47.16 billion (43 billion euros) in public money to support the EU Chips Act until 2030. “It will make Europe a more attractive place for tech companies to invest in cutting edge chips development and production,” von der Leyen said.

Harry Zarek, CEO and founder of Ontario, Canada-based Compugen, said Intel is doing the right things, but little will help the current supply chain crisis. “Anything that improves availability is a good thing,” Zarek said. “But I don’t know how a foundry that will take 3 or 4 years to construct will help us now. And we do need the help. There’s been an increase in demand in the PC market. This is not a short-term problem they are going to solve. These are going to be tough times.”

Any help on the supply chain side of the equation is helpful to channel partners, said Mike Turicchi, vice president of Gainesville, Va.-based NCS Technologies. “We are very encouraged to see this new investment in Europe,” he said. “We experience delays in bringing products to market each year due to the industry’s dependence on one geographic area of the world. Natural disasters, national holidays and a host of other risks make our business vulnerable when the supply chain is disrupted. Distributing the manufacturing locations more evenly around the world will make our business operations more stable and reliable.”