Intel increases its bid for German fabs

Intel increases its bid for German fabs

Business news |
By Nick Flaherty

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Intel has increased its budget for two fabs in Germany, providing the leading edge sub-2nm technology that European politicians have called for but pushing out the timeline.

The revised letter of intent signed in Germany today is short on details, other than a commitment to ‘Angstrom era’ process technology. This will be the 20A and 18A process technology that will be used by Intel Foundry Services but will require Extreme Ultraviolet (EUV) lithography equipment that will take up to two years to deliver from ASML in the Netherlands.

Intel says the commitment to European semiconductor manufacturing is over $30bn for two fabs, which it says is up from $17bn in the original announcement. However it is committing up to $4.6bn to a back end assembly and test plant in Poland as well as $25bn for a fab in Israel.

The original announcement in March 2022 planned to have construction start by the end of this month. The company now says the fabs will be ready four to five years after the EU signs off on subsidies, expected to have increased from €6.8bn to €9.9bn, the original target Intel had.

This reflects “the expanded scope and change in economic conditions since the site was first announced” says the company.

“Building the ‘Silicon Junction’ in Magdeburg is a critical part of our strategy for Intel’s growth. Combined with last week’s announcement of our investment in Wrocław, Poland, and the Ireland sites we already operate at scale, this creates a capacity corridor from wafers to complete packaged products that is unrivaled and a major step toward a balanced and resilient supply chain for Europe,” said Pat Gelsinger, CEO of Intel at the signing (above left standing). “We’re grateful to the German federal government, Chancellor Olaf Scholz and the government of Saxony-Anhalt for their partnership and shared commitment to fulfilling the vision of a vibrant, sustainable, leading-edge semiconductor industry in Germany and the EU.”

The initial investment in Europe announced in March 2022 included €12bn to support the Intel 4 process. “This brings the investment in Ireland to over €30bn,” said Gelsinger at the time. Having leading edge process technology has been a key priority for the EU, if not for the industry.

Chancellor Olaf Scholz of Germany (above right standing) said, “Today’s agreement is an important step for Germany as a high-tech production location – and for our resilience. Intel’s semiconductor production in Magdeburg is the single largest foreign direct investment in German history. With this investment, we are catching up technologically with the world’s best and expanding our own capacities for the ecosystem development and production of microchips. This is good news for Magdeburg, for Germany and for all of Europe.”

Vice Chancellor and Federal Minister for Economic Affairs and Climate Action Robert Habeck said, “Today’s agreement is a milestone for Germany as a location for innovation and investment, for jobs, resilience and competitiveness. Intel’s investment will raise semiconductor production in Germany to a new level and is an important contribution to growing European sovereignty.”

“Congratulations to Intel on further expansion here in Germany. Siemens is proud to collaborate with Intel to accelerate the semiconductor ecosystem in Europe. We are a key technology partner for this industry, supporting manufacturers to scale and build more resilient supply chains,” said Roland Busch, president and CEO of Siemens AG.

Like Dresden with fabs for Infineon, Global Foundries and Bosch, Germany sees the Silicon Junction at Madgeburg as the connection point for other centres of innovation and manufacturing across the country and region, promoting the development of a broad ecosystem of suppliers and companies across the technology industry. The site is expected to create 7,000 construction jobs over the course of the first phase of the build, approximately 3,000 permanent high-tech jobs at Intel and tens of thousands of additional jobs across the industry ecosystem.

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