A rendering shows early plans for two new Intel processor factories in Magdeburg, Germany. Construction is expected to begin in the first half of 2023, with production coming online at the end of 2027.
Intel Corporation / Courtesy of Intel
Intel will invest almost $19 billion to build two semiconductor factories, or fabs, in Magdeburg, Germany, the company announced Tuesday. The chipmaker plans to spend another $13 billion expanding its fab in Leixlip, Ireland.
The European expansion is the latest chapter in Intel’s factory-building boom. The company is aggressively expanding its manufacturing footprint — both at home and abroad — during the global semiconductor shortage.
“It’s bigger than one or two fabs. This is a holistic investment strategy, and it will create a world-class chip ecosystem that spans all of Europe,” said CEO Pat Gelsinger in his early morning announcement.
Gelsinger said Intel would also invest in research in France, expand its lab presence in Poland and Spain, and negotiate with Italy to establish a multi-billion dollar back-end manufacturing facility. The German fabs, he indicated, could produce chips in 2027 if Intel receives enough government support to make the project competitive.
The company said it could spend as much as 80 billion euros — about $88 billion — in the European Union over the next decade.
Intel has said its current manufacturing investments are the largest in its half-century history. Doubling down on manufacturing is part of Gelsinger’s turnaround plan for Intel — allowing it to produce chips for both itself and other companies. Gelsinger also wants to diversify the global chip industry, which is heavily concentrated in Asia.
Fabs, however, are extraordinarily expensive and Intel is counting on government support both at home and in Europe.
In recent months, Intel has launched plans to spend $40 billion building four new factories in Arizona and Ohio. The company said it could eventually construct eight fabs on its new “mega-site” outside Columbus, potentially making it one of the world’s biggest chip production sites.
That announcement set off soul-searching among politicians and business leaders in Oregon, which was passed over. Intel is Oregon’s largest private employer, with a workforce of about 22,000 in Washington County.
Intel has spent $3 billion upgrading the Ronler Acres campus in Hillsboro, its main research site. But the metro area can’t offer the vast industrial acreage needed to build new megafabs. (The first stage of the Ohio project, Intel said, will span almost 1,000 acres.)
Last month, officials formed the Oregon Semiconductor Competitiveness Taskforce, to address the future of Oregon’s chip industry. The group is chaired by Gov. Kate Brown, U.S. Sen. Ron Wyden, D-Oregon, and Portland General Electric president and CEO Maria Pope.
Intel has said the pace of its expansion in Ohio will depend on whether it receives subsidies from the $52 billion CHIPS Act now pending in Congress. That legislation is meant to boost domestic chip making capacity. Should the measure pass, Wyden and Intel are pushing for Oregon to receive funds designated for research and development.