Intel's €80bn European chip plant investment plan not bound for UK because Brexit

Promise to become 'a science and technology superpower' not cutting much ice with Chipzilla

Intel is cutting the UK out of its European expansion plans based on the nation's decision to leave the EU, the world's biggest political and trading bloc.

While the government voices ambitions for a high-value tech-based economy, Chipzilla has other plans.

Intel CEO Pat Gelsinger told the BBC this morning that the $77bn-revenue hardware giant would have considered the UK as a site for a new chip factory before it took the decision to leave the European Union.

But he added: "Post-Brexit... we're looking at EU countries and getting support from the EU."

Earlier this year, Gelsinger said the company was looking to invest up to €80bn (£68.8bn, $94.7bn) in semiconductor fabs in Europe to increase capacity over the next decade. It is understood that the vendor will be seeking government subsidies.

The company's existing Ireland factory would start making semiconductor components for cars.

He said Intel was planning to expand its chip manufacturing operations in Europe amid the global semiconductor shortage, and considering building factories in France, Germany, Belgium, Poland, or the Netherlands.

In April, Gelsinger reportedly told Politico he was seeking an €8bn ($9.5bn) subsidy due to the high cost of manufacturing in Europe. "What we're asking from both the US and the European governments is to make it competitive for us to do it here compared to in Asia," he said. (Intel has since denied any specific figure was mentioned in the interview.)

Launched in March, the UK's Build Back Better plan for growth focused on technology. "We will make our country a science and technology superpower," promised Prime Minister Boris Johnson.

But Gelsinger clearly has other priorities when it comes to spending his company's money.

Speaking about the decision to explore sites within the EU rather than the UK, he said: "I have no idea whether we would have had a superior site from the UK," he said. "But we now have about 70 proposals for sites across Europe from maybe 10 different countries.

"We're hopeful that we'll get to an agreement on a site, as well as support from the EU... before the end of this year."

Meanwhile, Gelsinger said semiconductor supply constraints – which have hit production in both computer and automotive industries – were set to carry on into Christmas.

"There is some possibility that there may be a few IOUs under the Christmas trees around the world this year," he said. "Just everything is short right now. And even as I and my peers in the industry are working like crazy to catch up, it's going to be a while."

The European Commission plans to boost production of "cutting-edge and sustainable semiconductors" in Europe to 20 per cent of global output by 2030, up from the current 10 per cent, according to its Digital Compass initiative.

Rival chipmaker TSMC has apparently started construction of several plants in Arizona and said in an earnings call earlier this year it "expects to invest about $100bn through the next three years to increase capacity to support the manufacturing and R&D of leading edge and specialty technologies."

US president Joe Biden signed an executive order in February to identify supply chains snarl-ups, and has backed a bill to spend $50bn in chip R&D and manufacturing in the US. ®