Intel pledges $36 billion to manufacture chips in Europe.

• The chipmaker in Santa Clara announced plans to construct a new "mega factory" in Germany with the help of public funding as part of its investment.
• The company committed to establishing a new R&D and design center in France and to invest in R&D, manufacturing, and foundry services in Ireland, Italy, Poland, and Spain.
• Over the next decade, Intel plans to invest up to 80 billion euros in Europe as part of a larger package.

The European Union announced on Tuesday that it plans to invest over 33 billion euros ($36 billion) to enhance its chipmaking capabilities, with the aim of becoming more self-sufficient in semiconductors.

The chipmaker, based in Santa Clara, announced plans to construct two new factories in Madgeburg, Germany, utilizing cutting-edge chip manufacturing technology to produce chips with a width of two nanometers or less.

Intel announced that construction will begin in the first half of 2023 and production will be online in 2027, assuming no regulatory issues arise.

The company stated that Germany is the ideal location for the new "Silicon Junction" mega-site due to its abundant talent, infrastructure, and existing ecosystem of suppliers and customers.

Intel announced that it will invest 17 billion euros in German facilities, with the expectation of creating 7,000 construction jobs and 3,000 permanent jobs.

According to a report from The Financial Times, Olaf Scholz, the chancellor of Germany, stated in a statement that the fabs will help rebalance global silicon capacity and create a more resilient supply chain. The fabs will be backed with billions of euros in state aid.

Beyond Germany

Intel committed to establishing a new R&D and design center in France and to invest in R&D, manufacturing, and foundry services in Ireland, Italy, Poland, and Spain.

Over 30 billion euros will be invested in Ireland to double the manufacturing space of a facility where less advanced technology is used, according to Intel.

Intel is in talks about establishing a new 4.5 billion euro manufacturing facility in Italy.

For nearly two years following the Covid-19 pandemic, there has been a shortage of certain semiconductors due to the strain on supply chains caused by the surge in demand for electronics.

The effort to lessen Europe's dependence on Asia and the U.S. for semiconductors is ongoing, but establishing chip foundries requires a substantial financial investment.

Intel, one of the three major chipmakers, announced that the investments are part of a larger plan to invest up to 80 billion euros in Europe over the next ten years.

The European Commission, the executive body of the EU, recently declared a new European Chips Act, which will allow for an additional 15 billion euros in public and private investments until 2030. This is in addition to the previously allocated 30 billion euros of public investments.

Intel CEO Pat Gelsinger stated that the EU Chips Act will enable private companies and governments to collaborate and significantly enhance Europe's standing in the semiconductor industry.

Our comprehensive plan will enhance Europe's R&D innovation and introduce advanced manufacturing to the region, benefiting our global customers and partners. We pledge to be a crucial player in shaping Europe's digital future for the long term.

Gartner analyst Alan Priestley stated last year on CNBC that it is a "huge undertaking" for Europe to establish an indigenous chip manufacturer on par with Intel, Samsung, or TSMC.

He stated that the investment needed for manufacturing advanced chips is substantial, making it "probably not feasible."

"Setting up a five nanometer manufacturing capacity cannot be done abruptly; it requires a gradual progression from previous generations," Priestley stated.

Additionally, Intel is investing billions in its home country by constructing two new fabs in Arizona.

TSMC is also establishing a new chip plant in Arizona as part of a $100 billion investment plan for the next three years.