Intel U-turns on plan to kickstart chip manufacturing plant in Germany

By Al Mayadeen English
Source: News websites
18 Dec 2022 00:15
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US conglomerate Intel backs away from investing in Germany after pledging tens of billions of euros in investments in a chip plant in the country.

The Intel manufacturing plant in Leixlip, Co Kildar, Ireland (Collins)

Intel, the US semiconductor behemoth, is taking a U-turn on a previous decision that would have seen it kickstarting the construction of a huge chip manufacturing plant in Germany, German outlet Volksstimme reported on Saturday.

Construction would have begun sometime during the first half of 2023 after Intel committed earlier in the year some €17 billion as an investment into the facility that would have been propped up in Magdeburg. Later on, the US conglomerate said the investment can increase by three-fold down the line.

Accordingly, with construction kicking off next year, the plant was expected to be fully operational by 2027, pumping chips into the global market, though that dream was short-lived.

Intel said it can no longer commit to the planned date seeing as the market is going through a "difficult [...] situation" amid increased costs and calls for a hike in government subsidies after Berlin pledged to make an investment of €6.8 billion in the facility.

Intel said earlier in the year that it had plans to invest tens of billions of euros in the European Union as the bloc's member states want to reduce their reliance on Asia for semiconductors amid an international shortage.

According to the firm, the project would boost the entire production process, intensifying research of new technologies and upping the manufacturing and packaging of semiconductors. Intel also revealed that it could be a costly $87.9 billion over the next decade.

As Intel backs away from Germany, the market could take a hit after US giants within the chip industry, such as Lam Research and KLA Corporation, both of which make chip-manufacturing equipment, have suspended sales and services to Chinese chipmakers. Meanwhile, the pressure caused ASML Holding, a Dutch-based chip equipment supplier, to implore its staff in the United States to stop exporting equipment to China.

Advanced Semiconductor Materials Lithography or ASML is a Dutch company that specializes in producing not the semiconductors, but the extreme ultraviolet (EUV) lithography machines that manufacture the chips.

ASML has a global monopoly on EUV production, being the only company in the world to make them, and supplies its products to the world's largest chip maker, Taiwanese TSMC.

However, according to CNBC, the US dissuaded the Netherlands from trading the machine with China for now, however, the latter does not seem excited to be cut off from one of the world's most demanding chip markets.

Additionally, US President Joe Biden signed in September an executive order to carry out more thorough inspections of foreign investment in technology, particularly in semiconductors and supply chains.

The priorities in question include preserving America's leading role in the tech industry, protecting sensitive data of US citizens, and bolstering the resilience of the domestic supply chain, the White House underlined.

The executive order did not specify Beijing, but it did come around a month after Biden signed legislation bolstering US semiconductor manufacturing to try subverting China.

This comes amid heightened rivalry between Washington and Beijing in the Indo-Pacific region and across the semiconductor sector. In an effort to match Chinese gains in the field, US President Joe Biden signed legislation in August providing $52 billion in subsidies for domestic semiconductor manufacture.

The US crackdown on the sale of technology to China has already begun to have an impact, with the US chip designer Nvidia disclosing last week that it had been told by US officials to stop exporting two top computing chips for artificial intelligence work to China.

Global shortages of computer chips, prompted by the coronavirus pandemic and the conflict in Ukraine, have caused production delays on a global scale for technology companies and other manufacturers.

However, as the chip industry has gained increased geopolitical prominence, Intel's move is speculated to be a further step by the United States to try and de-industrialize the European Union.