Intel Seeks EUR 8 Billion in Subsidies for European Chip Plant

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Intel wants EUR 8 billion ($9.7 billion or kind of Rs. 71,249 crores) in public subsidies towards building a semiconductor factory in Europe, its CEO was once cited as saying on Friday, as the region seeks to minimize its reliance on imports amid a scarcity 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 america and the European governments is to make it competitive for us to do it here in comparison to in Asia,” Gelsinger told Politico Europe in an interview.

Politico cited Gelsinger saying that he was once seeking kind of EUR 8 billion in subsidies. The company later distanced itself from the outline, saying he had not provided a particular figure, even if he had made it lucid that EU leaders needed to invest to verify a vibrant semiconductor industry.

Gelsinger, on his first European tour since taking charge, met European Commissioner Thierry Breton in Brussels on Friday. The visit followed the launch of a plan for Intel to invest $20 billion (kind of Rs. 1,48,191 crores) in chip production in the US.

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 percent over the next decade.

Breton held talks earlier on Friday with Taiwan Semiconductor Manufacturing Company (TSMC), the world’s No.1 chip maker ahead of Korea’s Samsung and Intel.

In separate tweets, Breton described his assembly with Intel’s Gelsinger as an “in-depth discussion”, while a video call with Maria Marced, president of TSMC Europe, had been a “good exchange”.

“To meet current & future semiconductor industry demand, Europe will drastically increase production capacity – both by itself and through selected partnerships to verify security of provide,” said Breton.

TSMC said the talks with Breton demonstrated its commitment to the region. “Our desire to strengthen our customers as fully as imaginable means that we’re all the time willing to set up open communications with governments and regulators wherever they, and we, are based,” the company said.

The Commission said Breton would hold further talks on May 4 with the CEOs of two Dutch semiconductor players: ASML, the leading maker of semiconductor lithography tools, and with chipmaker NXP.

Recent disruption to semiconductor provide chains has added urgency to efforts to minimize 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 draw a major foreign chipmaker has unnerved home-grown players, and he’s also discussing the creation of a European semiconductor alliance that would bundle their interests.

Germany’s Infineon said on Friday it welcomed Breton’s initiative to make stronger chip production in Europe.

“As financial resources are naturally limited it is very important discuss most pressing needs and the most fair ways of investment,” Infineon said.

German visit
Gelsinger, who met Economy Minister Peter Altmaier and Bavarian governor Markus Soeder on the German leg of his European tour, was once quoted as saying Germany would be a suitable location for a potential European foundry.

“Geopolitically, if you are in Europe, you wish to have to be in continental Europe,” he told Politico, in remarks echoed in a second interview with German commerce day by day Handelsblatt.

“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.

In Germany, Gelsinger also met executives from carmaker BMW and telecoms operator Deutsche Telekom, Intel said. Sources said he also visited the headquarters of Volkswagen, even if neither side confirmed this.

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

© Thomson Reuters 2021

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