Intel seeks €8 billion subsidy for a chip factory in Europe

Intel Corporation, an American multinational corporation and technology company headquartered in Seattle, is seeking €8 billion as public subsidies to fund the construction of a semiconductor factory in Europe. The desired amount equates to approximately $10 billion. This request comes from the company’s new CEO, Patrick P. Gelsinger, as Intel wishes to boost its self-sufficiency by reducing its dependence on imports, particularly during the pandemic, where a shortage of supplies has become increasingly common.

Patrick P. Gelsinger wishes to boost Intel's self-sufficiency by reducing its dependence on imports.

The announcement marks the first time that Gelsinger has placed a specific number on the amount of aid that he wants. This is a result of Intel’s decision to pursue a multi-million dollar project to compete with its Asian rivals in the industry of contract manufacturing. The assistance of both the European and American governments is required to make this process competitive for Intel in the western hemisphere.

While Gelsinger was initially cited as declaring that he would need €8 billion through public subsidies, he has now distanced himself from that number, as it was nothing more than a rough approximate. However, it has been made clear that investment from governments in the European Union will be needed to ensure that there is a vibrant and happening semiconductor industry in both Europe and North America.

Since being appointed as CEO of Intel in February 2021, Gelsinger made his first European tour in April, where he met Thierry Breton, the European Commissioner for Internal Market, in Brussels on Friday. This meeting took place after Intel’s plan to make an investment worth $20 billion in the production of chips in the United States. Moreover, Gelsinger is planning to build a plant in Europe that would support Breton’s goal of increasing the region’s share in chip production to 20% in the next 10 years.

Maria Marced, president of Taiwan Semiconductor Manufacturing Company (TSMC) – a Taiwanese multinational semiconductor contract manufacturing and design company – also had a talk with Breton about the current & future demand  of the semiconductor industry, for which Europe will increase its capacity for production.

Breton will hold further discussions with the CEOs of two Dutch semiconductor companies: ASML Holdings, which produces semiconductor lithography tools, and NXP Semiconductors, semiconductor and chip manufacturer.

According to both industry and diplomatic sources, among the top three chip producers, Intel is the only one so far to confirm their interest in pursuing Breton’s goal of producing the most technologically advanced chips in Europe. This might be because Breton’s project involves attracting interest and investment from a major foreign chipmaker, which has rendered domestic players perturbed.

Breton is also discussing the formation of a European semiconductor alliance that would collectively address their interests. Due to a limitation on financial resources, it is also important to discuss the most urgent of needs and the most reasonable and cost-efficient forms of investment.