Intel invests nearly $90 billion in European chip industry

The tech giant said Tuesday it will spend an initial 17 billion euros ($19 billion) to set up two new chip factories in Germany. Construction on a site in the northeastern city of Magdeburg, which he will call “Silicon Knot”, is expected to begin next year and begin operation in 2027.

“This broad-based initiative will spur innovation in research and development across Europe and bring cutting-edge manufacturing to the region,” Intel CEO Pat Gelsinger said in a press release.

The company plans to invest in all parts of the chip supply chain, including research, manufacturing and packaging, as well as investments in France, Ireland, Italy, Poland and Spain.

With an initial wave of investments of more than 33 billion euros ($36 billion), Intel expects to create about 5,500 jobs at the company, as well as thousands more in construction, suppliers and partners.

The new fabs will supply chips using Intel’s most advanced transistor technologies to foundry customers as well as in-house products.

BUT acute shortage of semiconductor chips harassing technology companies and automakers over the past year, when the economy reopened after the pandemic and demand for goods increased. Tiny chips can be found in a variety of consumer products, including smartphones and washing machines.

Volkswagen of Germany said in October that the chip shortage helped cut the company’s third-quarter profit by 12%. In the same quarter, Stellantis, a maker of several car brands including Fiat and Citroën, said it had produced about 600,000 fewer vehicles compared to last year due to shortages.

In recent months, the European Commission has stepped up its efforts to ensure chip supply. In February, the Commission said it plans to funnel 43 billion euros ($47 billion) of public and private investment into the industry under the proposed European Chip Law.

The European Union currently accounts for 10% of the global chip market, but could account for 20% by 2030 if the law passes, the Commission’s proposals say.

“The EU Chip Act will enable private companies and governments to work together to radically improve Europe’s position in the semiconductor sector,” Gelsinger said.

Intel currently employs about 10,000 people throughout the European Union.

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