Europe waits its turn as Intel commits to new US chip factories

Intel‘s announcement that it will invest more than $20 billion in two new semiconductor plants in the United States is in sharp contrast to its silence on European plans originally flagged last year.

The company said in September that it could invest as much as $95 billion in Europe over the next decade and announce the locations of two major new European chip fabrication plants by the end of 2021.

But no announcement has been made, while Intel on Friday laid out plans to build a massive new manufacturing site near Columbus, Ohio.

Analysts said the company could be waiting for the introduction of new legislation before deciding on a European location. The European Chips Act aims to reduce the continent’s dependence on Asian suppliers for advanced semiconductors by subsidising the local development of large chip factories.

Intel has been in talks with governments of various European countries as it scouts for a location, including those of Germany and Italy.

“We are excited about the conversations we are having … Details are confidential, but we will make an announcement as soon as possible,” an Intel spokesperson said.

Gartner chip analyst Alan Priestley said that with the planned Ohio site, pressure on Intel to locate a site in Europe could have reduced.

“They could also delay the decision if they expect the European Chip Act to have material impact on the financing,” he added.

The European Commission will propose the legislation in early February, and industry analysts expect it to pass later this year.

However, any additional capacity would need to start being built out now, as it can take three to four years for a chip factory to reach a significant output level, said Ondrej Burkacky, a senior partner at McKinsey.

Germany tops the list of potential candidates with the local governments of Penzing in Bavaria and Magdeburg and Dresden in eastern Germany trying to tempt Intel.

However, the mayor of Penzing told Reuters in December that he never heard back from Intel.

European carmakers were forced to cut production due to chip shortages last year as they jostled with consumer electronics makers to buy semiconductors.

Most of chips used by European companies come from three Asian suppliers – Taiwan Semiconductor Manufacturing Co, Samsung, and United Microelectronics.

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