Intel selects German city for EU semiconductor plant

CPU giant was waiting to see contents of European Chips Act before making the decision, say analysts

Intel has reportedly opted to build a new chip manufacturing mega-fab at a site in Magdeburg in eastern Germany, after considering locations in France, Belgium, Poland, and the Netherlands.

The chipmaker has previously said it was looking to invest up to €80bn in new semiconductor fabs in Europe. Germany was high on the list of potential locations, with sites considered in Bavaria as well as Magdeburg and Dresden.

According to Reuters, Intel has now settled on Magdeburg, but there is no official announcement yet from the chip giant, with a decision due to be made public on 4 March. We contacted Intel for confirmation but the company declined to comment.

The move would form a part of the five-year renewal and expansion plans discussed by Intel chief Pat Gelsinger a few weeks ago where he set out Intel's intentions to become one of the largest foundry operators in the world.

Gelsinger stated that he expects the US to expand from 12 per cent to 30 per cent of global semiconductor manufacturing capacity by the end of the decade, while Europe will have grown from 9 per cent to 20 per cent, in an attempt to catch up with Asian countries that have come to dominate chip manufacturing.

He also disclosed during those announcements that Intel has aggressive plans to bring five new manufacturing technologies (process nodes) into production by 2025. Previously, it has taken Intel between three to five years to bring a new process node online.

The move falls under Intel's Integrated Device Manufacturing (IDM) 2.0 strategy, which Gelsinger unveiled last year as part of a plan to revitalise the chipmaker's fortunes, which includes a $20bn investment in two new fabrication plants in Arizona.

As part of those plans, Intel recently acquired Tower Semiconductor, a business that specialises in manufacturing high-value analogue semiconductor components with facilities in Israel, US, Japan, and Italy.

The move follows the European Commission's decision to outline the European Chips Act early in February. This legislation is intended to bolster the European semiconductor industry by sparking investment in research as well as in new semiconductor manufacturing capacity to help make Europe as a whole become more self-reliant in the semiconductor market.

Analysts believe that Intel was waiting to see exactly what was in the EU Chips Act before making a firm decision on a European location. ®

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