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European Union building

The will-they-won't-they between Intel and the European union over next-generation bit manufacturing has been resolved. Intel has announced information technology will spend upward to €80 billion (approximately $95 billion in USD today) over the adjacent decade on two new foundries in Europe. While €80 billion figure is an "upward to," it'due south all the same an eye-popping figure in a relatively short period of fourth dimension. New fabs are expensive, but they're nowhere near that expensive.

Intel CEO Pat Gelsinger spoke at the IAA Mobility automotive event in Munich yesterday and opened his conversation with an obvious question: "Why is a semiconductor guy on phase at the biggest and most important mobility auto bear witness on earth?"

'A Computer With Tires'

The in a higher place header is a direct quote from Gelsinger'south speech yesterday. The full quote is: "We need you and you need the states. This is a symbiotic hereafter that we are off innovating and supplying as the machine becomes a reckoner with tires."

It'due south hard to argue the point. Automotive need for semiconductors has risen dramatically in recent years, and while the car market place is nevertheless much smaller than PCs, mobile, or the consumer electronics infinite, it's going to keep growing. Gelsinger believes the automobile TAM (Full Addressable Market) for semiconductors will ascension from $50 billion today to $115 billion by 2030. He also expects automotive semiconductor demand to hit 11 percent of the total marketplace by that year.

To put this investment in some perspective, Intel has reportedly spent €eighteen billion on its facilities in Ireland over the past 30 years, while it's planning to spend €80 billion by the end of the decade. Even accounting for inflation, that's a far larger sum over much less time.

Intel Leixlip

According to Gelsinger, Intel wants to meet twenty percent of global semiconductors produced in Europe by 2030, upwardly from 9 percent today. The company is committing to expanding its facility at Leixlip every bit well every bit building a new mega fab in Europe at an initial cost of €x billion per fab for two fabs, then building upwards to the aforementioned €eighty target by the terminate of the decade.

Even though he was speaking at an automotive outcome, Gelsinger rejected the idea that Intel would build fabs on older technologies. These are really the components currently used the most in the vehicle manufacturing industry, but Intel's CEO believes that may change in the future as the computational capability of cars increases.

The less charitable interpretation of this would be that Intel is going to build a fab in Europe that has precious little to practise with what Europe actually needs or what European companies want to buy. The optimistic interpretation is that Gelsinger is right to be investing in the future of semiconductor manufacturing and that demand for these parts will appear in the future. The idea of investing during a downturn or a difficult product wheel is a archetype Intel motility — exactly the kind of strategy Andy Grove in one case championed.

This is as well a maneuver to score points off TSMC, which has prominently rejected the thought of building fabs in Europe. Past prominently advertising its willingness to do and so, Intel is positioning itself as a friend to European semiconductor requirements at a fourth dimension when the machine industry is desperate for a lifeline. Intel hasn't appear where it may site its future factories, simply rumors have previously pointed to a old airbase in Germany as a possible location, in addition to the expansion planned at Leixlip.

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