Intel’s Salvation Lies in Europe—but Not With Fabs
Intel Corp. INTC 0.26% may be planning on pouring billions into Europe, but the chip-making giant’s investment in the Continent is unlikely to end there.
Intel on Tuesday announced plans to spend as much as $95 billion over the next decade to boost its chip-making capacity in Europe. The company already has a large fabrication facility in Ireland and said it is planning to build two more chip factories at a new, undisclosed site in Europe. A portion of the Ireland facility will be dedicated to making automotive chips—a sector still experiencing acute production shortages.
The move fits in with Intel’s latest strategy of aggressively expanding its manufacturing footprint—with the help of government subsidies—to meet demand for its own designs and to start producing chips designed by others. The latter option, known as a foundry business model, is a new one for Intel and puts the company into even more direct competition with Taiwan Semiconductor Manufacturing. The chip-making giant also known as TSMC has pulled ahead of Intel in manufacturing technology and has helped rivals such as Advanced Micro Devices and Nvidia to challenge Intel in key markets. TSMC has also enabled tech giants including Apple Inc., Amazon.com and Google to design their own processors—which also take slots once occupied by Intel’s chips.
Closing the gap with TSMC will require more than just additional fabs. The catch-up plan Intel outlined in July depends greatly on securing access to the next generation of chip-manufacturing equipment from ASML. The Dutch company effectively owns the market for extreme ultraviolet lithography, or EUV, tools that are required for the most advanced chip-making processes. During an investor presentation in late July, Intel Chief Executive Pat Gelsinger touted the long working relationship between the two companies and added that Intel will adopt the latest EUV tools as soon as they become available.
