Intel has unveiled plans for a second new “megafab,” a chipmaking site in Magdeburg, Germany, that’s the centerpiece of an expected $88 billion in investments across several European countries.
“The world has an insatiable demand for semiconductors,” Intel Chief Executive Pat Gelsinger said in a video announcing the investments. “Today, 80% of chipmaking takes place in Asia, but the company’s spending in the US and Europe will mean a “more balanced and resilient” supply chain that isn’t so dependent on Asia.”
Intel will start the company with $19 billion. The construction will start in 2023 and the manufacturing will begin in 2027.
The company will spend $13 billion to expand its existing fab in Leixlip, Ireland, doubling its size so the company can build chips on its new Intel 4 manufacturing process. Plateau de Saclay, France, will house a 1,000-employee research center. Intel also will expand its research site in Gdansk, Poland, and add a new supercomputing research facility in Barcelona, Spain.
“Our goal is to have 20% of the world’s microchip production in Europe by 2030. That’s twice as much as today in a market that’s set to double in the next decade,” European Commission President Ursula von der Leyen said on the video.
The project will hire 7,000 people during construction and create 3,000 jobs once in operation.
For Intel to stay relevant in the semiconductor manufacturing industry, it needs to build as many chips as possible to pay off enormous capital investments.
The global chip shortage will play in favor of Intel. Also, the new political will to subsidize the US and European chip manufacturing, spurred by worry that Western economies and militaries will rely on Taiwanese and Korean manufacturing.
That legislation hasn’t passed, but if it does, it could knock about $3 billion off the price tag of each $10 billion fab and thereby speed up Intel’s capacity expansion.