Absolutely fab: Intel will pump $80 billion into European chip production

• Intel is promising a big spend on future European chip fabrication
• But it’s not interested in “investing backwards” to support old designs in short supply 
• Gelsinger says Intel will instead encourage migrating old designs on to more modern nodes, setting them up for increased supply and flexibility into the future

Intel is planning to dedicate up to €80 billion on European semiconductor fabrication foundries over the next 10 years, said Intel’s newish CEO Pat Gelsinger yesterday [Tuesday] at the Munich Auto Show - his first “in-person keynote” since taking over at Intel six months ago.

However this investment, while decidedly welcome for Europe, will do little to avert the current global chip crisis which is seeing component and system vendors panic-buying (stockpiling and over-ordering) chips in an attempt to limit the damage to their own businesses, while perhaps relishing the difficulties their competitors are finding themselves in (see - Global chip shortage to impact telecoms until 2023: Report). 

The Intel investment is part of a long term plan (medium term at best) to build back European semiconductor prowess, said Gelsinger. As with the US industry, the European semiconductor business has often concentrated on chip design and passed over what was regarded as the lower-value but nevertheless demanding task of silicon fabrication, leaving all that to what appears now as an insanely concentrated cluster of companies in Taiwan, China and South Korea. All this is well documented and warnings have been made for several years.

All it took was a modicum of global disruption (Covid and some Sino-US argy-bargy) for the supply chains to snarl up leaving many technology firms (especially in networks) facing long wait times before chip supplies have a chance of flowing properly again. 

According to  Gelsinger, in 1990, Europe was responsible for 44% of the worldwide semiconductor industry, while today it’s responsible for 9% and still declining, he says. 

Granted, the structure of the industry has undergone a revolution across those 30 years with scaled up production representing a huge advantage to those that had the ability and the risk appetite to take the business on. But the consequence is that, apart from a few bright spots - ARM being one -  Europe has lost out and now has few cards to play when disruption kicks its way into the supply chain. 

“It’s something that is urgently critical to every aspect of a digital future,” said Gelsinger during his address to the motor show, “all of it running on semiconductors. [Europe is] on the verge of losing control of one of the most important technologies for the economy, for the national security of Europe as well. And COVID has shown that a globally balanced supply chain is absolutely critical.” he said.

“Autos are becoming important to semiconductors,” he said. “Your percentage of the total semiconductor market will grow to be 11% by 2030.” To support that trend Intel will commit chip manufacturing capacity at an Ireland factory to automotive chips,  he said.