Status: 09.09.2021 11:31 a.m.

The chip manufacturer Intel wants to build a new mega factory in Europe. Germany is still a candidate for the new location. It’s about billions – including subsidies. The project will not remedy the acute shortage of chips.

The world’s largest chip manufacturer Intel has been looking for a location for a new “mega-fab” on the European mainland for months. According to CEO Pat Gelsinger, German locations can continue to hope for the multi-billion dollar construction.

A decision will be made this year, he told the “Frankfurter Allgemeine Zeitung”. “Because we want to be able to start work next year.” Two locations in particular are in the running: the former Penzing air base in the Upper Bavarian district of Landsberg and the city of Dresden, where several chip manufacturers are already based.

Bavaria is campaigning intensively for a new chip factory

The Bavarian Minister of Economic Affairs, Hubert Aiwanger, has been campaigning for the group’s favor for months, as a settlement of Intel in the Free State would be an outstanding opportunity for the business location. In addition, the current shortage of chips shows that Europe and the federal government urgently need to act in terms of industrial policy.

Chancellor Angela Merkel apparently also sees it that way. According to the information, she received the Intel boss twice in the past week. In the spring, Gelsinger visited Bavaria’s Prime Minister Markus Söder and then traveled to Brussels with Federal Minister of Economics Peter Altmaier. There it should have been about the question of whether the EU would approve aid worth billions from the federal government and the Free State in favor of Intel. The answer was apparently positive. We are talking about 30 percent to 40 percent of the investment volume. As is customary in Asia. And the states there, especially South Korea, set the standards.

Grants of up to eight billion euros

Since Intel initially wants to start with two factories, each of which should cost ten billion euros, it is about grants of up to eight billion euros. And that is just the beginning. “We want to build eight factories. And they all have to be competitive. However, if you are in competition with Asian competitors who are heavily subsidized by the state, you have to do that here too – or you no longer play along,” said Gelsinger in an interview with the “FAZ”. In total, Intel wants to invest 80 billion euros in Europe.

The Intel boss emphasizes that this is money well spent. “Because around 1,500 people will work in each of these factories.” For each of these employees there would be between five and ten additional jobs at suppliers and service providers.

With this in mind, Bavaria is doing everything it can to meet the Group’s expectations. The plan is to make the entire air base available to Intel. Apparently, the listed buildings and halls are also no problem for the chip manufacturer. The Free State has promised Intel that it will also remove the contaminated sites caused by the foam used by the air base fire brigade.

Saxony also gives hope

According to experts, the fact that Intel already conducts its German business from Munich speaks in favor of Bavaria. Infineon, Germany’s largest chip manufacturer, is also based on the Isar. In addition, all the leading semiconductor companies have larger branches in the metropolis. Texas Instruments even operates a plant in Freising not far from the airport.

In addition to Bavaria, Saxony is also hoping for a new chip factory. “We are number one among the semiconductor locations in Europe”, said Frank Bösenberg, managing director of the industry association Silicon Saxony, the “Handelsblatt”. “It would be difficult to find arguments against Saxony.” The region around Dresden is unique due to its combination of research and semiconductor companies.

Infineon and the contract manufacturer Globalfoundries operate large plants here, and in June the automotive supplier Bosch opened a new semiconductor factory in Dresden. The Fraunhofer-Gesellschaft is also on site with ten institutes. One problem, however, could be the availability of the space used by Intel: The company claims that it needs 500 hectares. In addition, according to Gelsinger, Intel needs “enough electricity, water, talent and incentives”.

Acute lack of chips remains

However, the new factories will not remedy the acute shortage of chips from which the auto industry in particular has been suffering since the outbreak of the pandemic. Because the construction of a new “fab” takes four years, according to Intel.

Nevertheless, in the medium term, the new location should help to reduce Europe’s dependence on the semiconductor industry in Asia. The EU plans to increase Europe’s market share to 20 percent in ten years. That would be $ 200 billion in sales, five times what it is now. “Asia would still be 50 percent. But the new ratio would be more balanced than it is today,” said Gelsinger.

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