Intel Corp to expand in France, Germany and Italy in comeback

The Intel headquarters in Santa Clara, California. Intel’s global push to increase capacity will include adding facilities in France and Italy, as well as putting a major production site in Germany, according to people familiar with negotiations.

Intel Corp’s global push to increase capacity will include adding facilities in France and Italy, as well as putting a major production site in Germany, according to people familiar with negotiations.  France will be home to a research and design centre, and Italy will be the location of a test and assembly factory, according to the people, who asked not to be identified because the plan hasn’t been announced. The main wafer fabrication plant, or fab, will likely be built in Germany, according to the people. Altogether, the expansion will cost tens of billions of dollars.Chief executive officer Pat Gelsinger is trying to restore the world’s largest chipmaker to its former shine. The company has lost its technological edge to rivals and ceded market share - something the spending binge is meant to address. Gelsinger also wants to bring more production back to the US and Europe, counterbalancing Asia’s manufacturing dominance.Representatives of the French, German and Italian governments declined to comment, as did Intel spokespeople in Europe and the US. For Europe, the move would slow its decline as a manufacturing base in the $400bn chip industry. The US company has an existing plant in Ireland and there are older former Advanced Micro Devices Inc processor factories that are owned by Globalfoundries Inc in Dresden, Germany. But European manufacturers typically don’t make the kind of advanced logic chips that are regarded as the state of the art in the industry.NXP Semiconductors NV and STMicroelectronics NV are the continent’s two largest homegrown chipmakers. They focus on parts for cars and other equipment - rather than the advanced computer processors that are Intel’s speciality.A global chip shortage also has renewed concerns about the concentration of production in Asia. Manufacturers such as Taiwan Semiconductor Manufacturing Co and South Korea’s Samsung Electronics Co have grown increasingly deft at producing chips, forcing Intel to play catch-up. Gelsinger has argued that spreading manufacturing around the world will help avoid the kinds of supply constraints that have hobbled whole industries this year, including automakers. Part of Gelsinger’s plan is to build factories that make chips for other companies, directly rivalling TSMC in the so-called foundry business. Until now, Intel has typically only manufactured chips of its own design.To help fund his ambitions, he’s called on lawmakers on both sides of the Atlantic to give public money in the form of tax breaks and grants to chipmakers willing to build plants in Europe and the US. By spreading around Intel’s spending, Gelsinger may be trying to placate as many EU members as he can to try to make sure that none of them try to object any central funding that’s made available. But the plans aren’t final yet. The mega-fab will likely be built in Saxony, with German regions of Saxony-Anhalt and Bavaria also in the running for the new factory.Intel’s ambitious new ventures could bring thousands of jobs. The company is also planning to create 4,000 jobs in Malaysia via a $7.1bn investment in new chip packaging facilities.Even with the potential government help, Intel is budgeting as much as $28bn for new plants and equipment in 2022, up from roughly $18bn this year. The spending plans have jarred investors, who worry about the toll on profit. But the massive increase in expenditures will only put Intel on course to keep up with TSMC and Samsung’s spending.Shares of Intel, based in Santa Clara, California, have gained just 2.3% this year - even as its peers have enjoyed boom times. The Philadelphia Stock Exchange Semiconductor Index has climbed 39%, with companies such as Nvidia Corp more than doubling. State-of-the art chip production plants cost more than $20bn, and their most expensive component - machinery - is usually obsolete within five years. The German plant could have a price tag in that range. The Italian test and assembly plant, meanwhile, will cost around $10bn. Intel and government officials there are still negotiating on the site, with Sicily being one area under consideration, according to one of the people familiar with the situation. The French R&D centre may be built in either Paris or Grenoble, according to another person. Such facilities typically cost only a fraction of the amount needed to build a factory.