‘Silicon Junction’: Intel to Build $19 Billion German Semiconductor ‘Mega-Site’ to Move Supply Chains Back West

An engineer works in the clean room facilities at the LETI, a French research institute fo
JEAN-PIERRE CLATOT/AFP via Getty Images
Kurt Zindulka

American chip manufacturer Intel has announced that it intends to create a “leading-edge semiconductor fab mega-site in Germany” as a part of its strategy to move supply chains out of East Asia and back to the West.

Amid concerns over the security implications of microchip supply chains, the overwhelming majority of which are currently produced in East Asia, governments and companies have seemingly woken up to the importance of having manufacturing bases in Western nations.

As a part of this shift back to the West, chipmaker Intel announced that as part of its first stage of its €80 billion (£67/$88 billion) investment plans for Europe, it will be constructing a €17 billion (£14/$18.68 billion) “Silicon Junction” mega-site to produce semiconductors and other microchips in Germany.

Intel went on to lay out plans for Research & Development site in France, as well as increased investments in Poland, Spain, and Ireland, in order to create “a next-generation European chip ecosystem and addressing the need for a more balanced and resilient supply chain.”

The fragility of global supply chains was put on full display during the Chinese coronavirus crisis, which itself resulted in a global chip shortage. However, in the wake of the Russian invasion of Ukraine, concerns have been raised over a potential invasion from Communist China of the independent nation of Taiwan, which produces an estimated half of all the world’s semiconductors.

In response to the growing threat to the supply of semiconductors, — which are necessary for almost all modern technologies from cell phones to medical equipment — the European Union set out its own €15 billion investment scheme as well as loosening regulations in order to attract more companies to bring manufacturing away from Asia.

According to Intel, the manufacturing hub in Germany — which it has referred to as the “Silicon Junction” of Europe — will create 7,000 construction jobs during the building of the site and will result in 3,000 permanent high-tech jobs in the factory.

Pat Gelsinger, CEO of Intel said: “The EU Chips Act will empower private companies and governments to work together to drastically advance Europe’s position in the semiconductor sector.

“This broad initiative will boost Europe’s R&D innovation and bring leading-edge manufacturing to the region for the benefit of our customers and partners around the world. We are committed to playing an essential role in shaping Europe’s digital future for decades to come.”

The moves from the EU and Intel fall in line with desires from former American President Donald Trump, who spearheaded efforts to protect semiconductor supply chains, including enacting sanctions prohibiting companies such as Intel from selling chips to Chinese telecom Huawei.

Germany, for its part, has also finally acquiesced to demands from the former president to meet its NATO spending obligations, part of which was spent last week on the purchase of dozens of American-made F-35 stealth fighter jets from Lockheed Martin.

Meanwhile, Intel has also announced earlier this year, that it will be constructing a $20 billion semiconductor factory in Ohio, which it has claimed will become “the largest silicon manufacturing location on the planet” spanning over 2,000 acres and will employ over 3,000 people at the site, alone, with “tens of thousands” more employed along the supply chain.

Follow Kurt Zindulka on Twitter here @KurtZindulka

COMMENTS

Please let us know if you're having issues with commenting.