Intel to Invest $20b in Semiconductor Production in Europe

06-08-2021 | By Sam Brown

Recently, nations worldwide have been discussing becoming self-sufficient in semiconductor production ever since it became apparent that the most important ICs are made in just a handful of places around the world. Why are nations moving towards semiconductor self-sufficiency, what are Intel’s plans in Europe, and what challenges does self-sufficiency present?

Why are nations moving towards semiconductor self-sufficiency?

The semiconductor shortage of 2020 / 2021 has been at the centre of attention in the electronics industry. Thanks to COVID-19 and the subsequent lockdowns, the semiconductor has been thrown into a period of instability, resulting in many industries having to slow down production. However, the semiconductor shortage has also demonstrated how sensitive nations are to a disruption in the supply of semiconductors, and it would now appear that nations are as dependent on chips as they are on energy.

Further investigation into semiconductor supply chains has revealed that most semiconductors are produced in the far east. Many western nations rely on countries such as Taiwan, South Korea, and China for parts. This has led many nations to raise concerns about their national security as devices used in critical infrastructure and security services may be susceptible to foreign cyberattacks. 

As such, nations around the world are starting to move towards semiconductor sovereignty. This is being realized in a number of ways from tax relief on semiconductor companies that set up shop to government grants that will incentivize new startups. 

Intel Plans to Spend $20 Billion in Europe

Recently, Intel announced that it is planning to invest up to $20 billion in Europe over the next decade, and hopes that the EU will provide an €8 billion subsidy. Currently, the EU is looking to increase its semiconductor production capabilities so that by 2030 the EU will be responsible for 20% of the global output of semiconductor devices. According to Intel, the €8 billion subsidies would balance the more expensive manufacturing costs faced in the EU than far east countries such as China and Taiwan.

The exact location as to where fabrication plants will be constructed is still to be finalized, but Intel has suggested that Belgium, France, Germany, and the Netherlands are on the table. Intel expects to construct up to 8 plants around Europe in the next five years, which includes an advanced packaging plant and cutting edge device fabrication. At the same time, Intel is also investing $20 billion in the US on 3D packing facilities to continue their development in semiconductor technologies.

What challenges does setting up semiconductor foundries present?

The semiconductor industry is unlike any other, and the production of such devices is not for the faint of heart. While automotive and planes are complex machines, they are easily put together with a workforce using minimal training. Semiconductors, however, are extremely complex devices whose very construction requires highly trained staff. This is where the semiconductor manufacturers face a major challenge; finding suitable employees.

Europe is home to many large businesses and technically skilled individuals, but the field of semiconductor production is not something the EU is known for. Anyone can build a semiconductor factory wherever they like provided they have the funds. However, most businesses rely on the local population for the bulk of their employed staff, and this can be a problem for semiconductor businesses. For example, a semiconductor factory built in the middle of the Scottish Highlands would struggle to find employees with the technical knowledge to work in a fabrication plant. Intel (and others) may find it difficult to find employees to run their fabrication sites all while being familiar with their equipment.

Other challenges faced by semiconductor businesses include the time needed to construct such sites, getting government approval, environmental concerns, and the long time needed to produce semiconductors. However, governments around the world may be able to incentivize locally sourced semiconductors by also imposing large taxes on devices that use foreign-sourced parts. The comment from Intel suggesting that parts are cheaper to make in the far east also highlights the West's desire to outsource production to countries using cheap labour, which brings into question the morality of using far east manufacturers. 

By Sam Brown