Intel Rules Out Fab Investment in UK, Blaming Brexit

Article By : John Walko

Intel has officially ruled out the UK as the site for its planned huge expansion of chip manufacturing capability in Europe, blaming Brexit.

Intel has officially ruled out the UK as the site for its planned huge expansion of chip manufacturing capability in Europe, blaming the country’s choice to leave the European Union (EU) for its decision.

Pat Gelsinger, the American semiconductor giant’s CEO told the BBC Thursday (Oct. 7, 2021) that “post Brexit, we are looking to the EU countries and getting support from the EU”.

The announcement is a huge blow to the UK’s manufacturing capability, coming just a day after Boris Johnson, the country’s Prime Minister, said he is targeting the UK to become a “science and technology superpower”.

Intel's CEO Pat Gelsinger
Intel’s CEO Pat Gelsinger

Gelsinger revealed earlier this year that Intel was planning to invest €80 billion in building new fabs or expanding existing facilities over the next 10 years, as well as hugely increasing capacity in the US.

He told the BBC, “I have no idea whether we would have had a superior site from the UK. But we now have 70 proposals for sites across Europe from maybe ten different countries. We are hopeful we will get agreement on a site, as well as support from the EU […] before the end of this year”.

It is understood sites in France, Poland, Germany, Belgium and the Netherlands are the most likely to get the nod, as well as extending its facility in Leixlip, County Kildare, Ireland.

The UK Government launched its Build Back Better for growth strategy last March, so the decision and rebuff is a significant blow to Johnson’s plans.

For many years, the UK was seen as one of the most favourable gateways to Europe for US and Asian countries. But Intel clearly considers the country no longer has a sustainable supply chain resilience, nor can it any longer guarantee free cross-border trade.

Gelsinger also bemoaned the current state of the global semiconductor industry, stressing “just about everything is short right now. And even as I and my peers in the industry are working like crazy to catch up, it’s going to be a while”.

He opined the supply situation would “incrementally” improve next year and is not likely to stabilize until 2023, but that the current chip crisis is likely to last until Christmas. “There is some possibility that there may be a few IOUs [I Owe You] around the Christmas trees around the world this year,” he quipped.

Gelsinger also stressed the company was expecting to secure state subsidies in both Europe and the US, since both have become over-reliant on Asian countries for much of their semiconductor needs. Some two-thirds of the world’s chips are currently produced in Taiwan and South Korea, where semiconductor manufacturing is significantly cheaper.

The EU is hoping to double its share of global chip fabrication, from the current low of about 10% to nearer 20% and it probably needs at least one of the top three of TSMC, Samsung or Intel in order to achieve this.

The European project is a significant plank in Gelsinger’s ambitious strategy, dubbed IDM 2.0, which envisions an updated version of Intel’s integrated business model. It would see the company not only designing and assembling its own chips, but also offer contract manufacturing operations for other semiconductor suppliers.

It would also bolster the existing cluster of expertise in chip manufacturing in Europe at companies such as ASML in the Netherlands and Zeiss in Germany, as well as the Continent’s highly rated research outfits like IMEC in Belgium, CEA-Leti in France and the Fraunhofer Institute in Germany.

This article was originally published on EE Times Europe.

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