Intel’s German chip fab plans expand

Intel will spend more than $32 billion to open two high-end microchip fabrication facilities in Magdeburg, Germany, in an expansion of the chipmaking giant’s plans for European growth.

In an announcement on Monday, Intel also said that the facilities would use its more advanced Angstrom manufacturing process, which is used to manufacture sub-nanometer chips. The use of this technology has always been in the plans for the Magdeburg site, for which Intel acquired the land in November 2022. That initial plan, announced in March 2022, earmarked $18.55 billion for the site.

The company said that the facility will enter production in four to five years, “following the European Commission’s approval of the incentive package.” About 30% of the costs for the Magdeburg facility (roughly $5.5 billion) will be covered by government subsidies, according to a report from Bloomberg at the time of the deal’s initial announcement. That figure is set to increase to nearly $11 billion as of yesterday’s announcement.

The expanded plans for the German manufacturing site are part of Intel’s larger strategy to locate substantial facilities in the EU. A further $13 billion is earmarked for a site in Leixlip, Ireland, which should bring total investment in that country to nearly $33 billion, along with an R&D hub in France that Intel said should create more than 1,000 jobs. A new back-end manufacturing facility is planned for Italy, at a cost of almost $5 billion in investment, as well as a supercomputing center in Barcelona, Spain, and increased lab space in Poland.

Germany, like most large nations, has been increasingly eager to bolster domestic semiconductor production in recent years, as the ongoing trade dispute between China and the US continues to incentivize moves away from suppliers in East Asia. Many countries have implemented rules similar to the US’ CHIPS and Science Act, which provides incentives to chipmakers looking to set up new production.

That trade dispute has proved to be a concern for CIOs, who need to assess their supply chains for dependence on Chinese semiconductors. It’s a particularly acute issue for businesses planning to use AI technology, as using Alibaba cloud for training or AI accelerator chips from Horizon may quickly become a non-option.