Tuesday, May 4th, 2021
Will Germany win the contract?
Intel invests billions in chip factories
In the past few months, the technology industry has suffered from a shortage of computer chips. Market leader Intel now wants to invest massively in production and is investing billions in a plant in New Mexico. Germany could also benefit from the chip giant’s investment offensive.
In the midst of the global semiconductor shortage, the chip giant Intel is investing billions more in expanding its production in the USA. The plant in the state of New Mexico is to be upgraded for 3.5 billion dollars (around 2.9 billion euros), as the company announced on Monday. This involves the introduction of a complex new Intel technology in which chip components are stacked on top of one another instead of being arranged next to one another. It should ensure more compact and at the same time more powerful processors.
Intel had already announced the construction of two new factories in the US state of Arizona in March. In the USA, the shortage of semiconductors, because of which, for example, various car manufacturers had to suspend production, is also seen as a political problem. That is why there are demands to expand production in their own country.
Factory construction in Germany is also possible
The world’s largest semiconductor manufacturer also wants to invest billions in Europe. The condition for this, however, is sufficient state funding. Germany has a good chance of investing billions of euros from Intel. “There is a lot to be said for Germany,” said CEO Pat Gelsinger to the Handelsblatt. The US chip company is currently looking for a location in Europe for a new, ultra-modern factory.
However, Intel only builds if the public funding is right. They have to be oriented towards those countries that are currently leaders in the industry – that is, Taiwan and Korea. There a semiconductor manufacturer gets reimbursed around 40 percent of the costs from the state. “We need this level to be competitive,” said Gelsinger. “A new factory costs at least $ 10 billion, and you need two of them in one location to take advantage of economies of scale,” said Gelsinger.
This would require subsidies of 8 billion euros to attract Intel. In return, Intel promises a long-term commitment. The CEO warns politicians not to take too much time with a decision on how strongly the settlement will be promoted. Intel itself wants to determine the new location in the second half of the year.
The new Intel boss Pat Gelsinger has already warned repeatedly that the chip bottlenecks could last for several years – also because investments do not take effect immediately. The shortage was triggered by the skyrocketing demand for technology such as laptops in the corona pandemic and inventory purchases by the Chinese Huawei group in the face of US sanctions. The Intel business has recently come under greater pressure from competitors. Gelsinger wants to counteract, among other things, that the group increasingly produces as a contract manufacturer for others.