Published - Mar 16, 2022 @ 11:38 AM (EET)

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As it prepares to invest $88 billion in sites across Europe over the next decade, Intel Corp. (NASDAQ:INTC) has picked Germany to invest $18.7 billion for a new chipmaking complex, which marks the beginning of Europe's attempt to attract chipmakers back to the region.

Intel's expansion is "an important impulse for the economy in a difficult time and a major leap forward for Europe's digital sovereignty," says German Minister Robert Habeck of Economic Affairs and Climate Action.  

Moreover, the size of the European market is another major positive for Intel in making an investment of momentous dimension at the heart of Europe.  By comparison, the gigafactory currently being built outside Berlin by Tesla is worth $6.9 billion.

It marks Intel's second announcement in 2022 for a multibillion-dollar plant investment after it selected Ohio to erect a brand new $20 billion chipmaking facility that could expand to a $100 billion site earlier this year.

WHAT IS EXPECTED

Construction of two new factories on the German site is expected to start in the first half of next year, and production to commence in 2027 pending European Commission approval, said Intel. 

As part of Chief Executive Officer Pat Gelsinger's bid to win back market share, the plant in Germany will attempt to produce chips smaller than 2 nanometers, which is yet to be achieved. 

According to figures cited by Brussels, the EU accounted for almost 20% of the world's silicon wafer production in the 1990s, which has fallen to about 10% in recent years. 

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Germany is therefore ideal for establishing a new hub.  

Being at the center of Europe and with top talent, superb infrastructure, and an existing ecosystem of suppliers and customers makes it an ideal place for a "Silicon Junction" for advanced chipmaking.

Moreover, by committing to Europe and Germany, Intel will be able to speed up the acquisition of new customers.  

In early trading Tuesday, Intel shares were unchanged.

“Our pan European investment addresses the global need for a more balanced and resilient supply chain. We are planning to bring the most advanced technology to Europe and help the EU create a next-generation European chip ecosystem.” - Pat Gelsinger, Intel CEO.

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