Intel Selects German City For European Chip Factory – Report

Intel has opted for the the east German city of Magdeburg as the location of its new multibillion-euro European chip factory.

This is according to Reuters, which quoted a person familiar with the matter. That said, there is no official confirmation at the time of writing, but the decision is expected to be made public on Friday 4 March.

Intel has not been exactly shy in enticing European officials to pledge monies to subsidise building the chip factory. Indeed, Intel CEO Pat Gelsinger in March 2021 stated Intel was seeking 8 billion euros (£7bn) in public subsidies for its planned semiconductor plant in Europe.

Magdeburg factory

It was reported that both France and Germany were vying for Intel’s chip manufacturing ‘megafab’ plant (but Germany was said to be the leading contender).

Now Reuters has reported that the east German city of Magdeburg has been selected.

It is reported that government subsidies, stability and availability of skilled workers were factors that encouraged Pat Gelsinger to choose Germany for the new plant, the source said.

Germany it should be remembered is also home to many of the world’s biggest car makers, which have been particularly badly hit during the global chip shortage.

The city of Magdeburg itself is relatively small, but it is the capital of Saxony-Anhalt state.

It hosts the Otto von Guericke University and has space for a new plant in the Eulenberg industrial area in the southwest, Reuters reported.

It is not clear when construction of the new factory could start.

Indeed, there has not been any official confirmation of the location by Intel, so far.

European chip ambitions

The EU for years has been seeking the ability to make high-end chips in its trading bloc, and the desire was increased by the global chip shortage during the Coronavirus pandemic.

In March 2021 the European Union under its 2030 Digital Compass plan announced it wanted to produce at least 20 percent of the world’s cutting-edge semiconductors by the end of the decade.

To help achieve this goal, the European Commission last month officially proposed easing state aid rulings to help countries offer financial incentives for the building of chip factories.

The proposal, known as the ‘European Chips Act’, is touted as a way to bolster Europe’s self sufficiency in the semiconductor sector, by easing state aid rules, improving tools to anticipate shortages and crisis, and strengthen research capacity in the bloc.

Analysts had predicted Intel may wait for the introduction of new legislation before deciding on a European location.

It should be remembered that chip companies typically require substantial cash incentives or tax breaks, in return for building an expensive chip factory in a particular location.

In September 2021 Gelsinger said Intel could potentially invest as much as 80 billion euros ($95bn or £69bn) to expand chip production in Europe.

Now it looks as though Germany may be the location for the Intel fab.

But the German factory is not the only one.

Italy is said to be competing with Poland (and France) for a new Intel advanced packaging and design factory, and this week it was reported that Italy is establishing a $4.6bn fund to lure Intel to the nation.

The advanced packaging plant will reportedly utilise innovative technologies to weave full chips.

Chip packaging plants typically integrate different types of semiconductors onto wafers, and are a key part of the chip manufacturing process.

The US meanwhile has proposed $52 billion in the US Chip Act to ramp up domestic chip production in the United States. In January Intel announced plans to build a $20 billion US chipmaking facility in Ohio.

Meanwhile the world’s largest contract chip maker, Taiwan Semiconductor Manufacturing Co. (TSMC) has previously warned that plans by US, EU and others to bring semiconductor production into their own countries could result in a costly, unworkable system.

In July 2021 TSMC also dampened down speculation that it was considering building its first European semiconductor plant in Germany.