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Intel seeks $10 billion in subsidies for European chip plant

Stock MarketsApr 30, 2021 09:40AM ET
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© Reuters. FILE PHOTO: Intel's logo is pictured during preparations at the CeBit computer fair in Hanover

By Douglas Busvine

BRUSSELS/BERLIN (Reuters) - Intel (NASDAQ:INTC) wants 8 billion euros ($9.7 billion) in public subsidies towards building a semiconductor factory in Europe, its CEO was quoted as saying on Friday, as the region seeks to reduce its reliance on imports amid a shortage of supplies.

The pitch is the first time Pat Gelsinger has publicly put a figure on how much state aid he would want, as Intel pursues a multibillion-dollar drive to take on Asian rivals in contract manufacturing.

"What we’re asking from both the U.S. and the European governments is to make it competitive for us to do it here compared to in Asia," Gelsinger told Politico Europe in an interview.

A spokesman for Intel confirmed the interview took place on Friday in Brussels, where Gelsinger was due to meet European Commissioner Thierry Breton for talks on semiconductor strategy.

Gelsinger, on his first European tour since taking charge, announced a new strategy last month for Intel to invest $20 billion in chip production in the United States.

On top of that, Gelsinger is prospecting for a location for a plant in Europe that he says would back Breton's goal of doubling the region's share of global chip output to 20% over the next decade.

Breton also held talks on Friday with Taiwan Semiconductor Manufacturing Co Ltd (TSMC), the world's No.1 chip maker ahead of Korea's Samsung (KS:005930) and Intel.

"To meet current & future semiconductor industry demand, Europe will drastically increase production capacity - both on its own and through selected partnerships to ensure security of supply," Breton tweeted after the talks.

Recent disruption to semiconductor supply chains has added urgency to efforts to reduce import dependency, yet analysts caution Europe's shrunken technology base means it doesn't offer a viable market for a leading-edge plant, or 'fab'.

Industry and diplomatic sources say that, of the Big Three chipmakers, Intel is the only one so far to express concrete interest in Breton's goal of producing the most advanced chips in Europe.

Breton's drive to attract a major foreign chipmaker has unnerved home-grown players, and he is also discussing the creation of a European semiconductor alliance that would bundle their interests.

Germany's Infineon (OTC:IFNNY) said on Friday it welcomed Breton's initiative to strengthen chip production in Europe.

"As financial resources are naturally limited it is important to discuss most urgent needs and the most reasonable ways of investment,” Infineon said.

GERMAN VISIT

Gelsinger, who met German Economy Minister Peter Altmaier on Thursday, was quoted as saying Germany would be a suitable location for a potential European foundry.

"Geopolitically, if you’re in Europe, you want to be in continental Europe," he told Politico.

"We think of Germany as a good candidate - not the only, but a good candidate - for where we might build our fabrication capabilities," he said, also indicating interest in the Benelux countries.

On the German leg of his visit, Gelsinger also met executives from carmaker BMW and telecoms operator Deutsche Telekom (OTC:DTEGY), Intel said.

Sources said he also visited the headquarters of Volkswagen (DE:VOWG_p), although an Intel spokesman said he could not confirm that a meeting took place.

Separately, Volkswagen CEO Herbert Diess was quoted on Friday as saying the carmaker planned to design and develop its own high-powered chips for autonomous vehicles. [L8N2MN4YR]

Gelsinger travels on next week to Israel, where Intel is due to announce a $200 million investment in a new chip development campus and the hiring of 1,000 staff.

Intel seeks $10 billion in subsidies for European chip plant
 

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Comments (3)
In Sight
Insight May 03, 2021 6:17AM ET
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If ATVs would have not canceled their orders in 2020 in fear of low sale numbers due covid, there would be no shortage over there.... the problem is not really just on foundry site but also on customer site, they know the long leading times, new fabs wont help with that.. Yes demand is big and so is supply, but demand and supply will meet by 2022. Producing overcapacities doesnt help anyone, except intel getting his bu*tt subsidized to make up for their f ups and pretending its for the greater good. Sorry I hope the EU does not support this, especially considering that they would only trade asian vs american dependecies. Apart from that that there is no real b2b customer demand within the eu when it comes to chips that requires big fabs. They should rather subsidize european companies instead. no offense.
danny Levine
danny Levine Apr 30, 2021 10:35AM ET
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companies are holding jobs as hostages. unfair to tax payers
Kaveh Sun
Kaveh Sun Apr 30, 2021 10:29AM ET
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If Intel turns into a fab, that is justified. Otherwise, No
 
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