Intel will freeze the construction of factories in Europe to optimize costs and projects in the US

Intel’s promise to maintain plans to build new and modernize old plants in the United States is explained by the conditions for providing subsidies under the Chip Act. At the same time, common sense tells the company that costs need to be reduced, so Intel projects outside the United States, in Germany, Poland and Malaysia, will become victims of such optimization.

Image Source: Intel

In its press release, the company explains that it will suspend for a couple of years a project to build two chip contract manufacturing facilities in Germany, as well as a chip testing and packaging facility in Poland. Back in November 2022, Intel acquired a plot of land in Magdeburg, Germany for the construction of two enterprises that would require 30 billion euros of investment and would eventually allow the production of angstrom-class chips in Europe. If we consider that Intel refused to develop the 20A technological process in mass production, then theoretically German enterprises could master the 18A technology and more advanced ones. However, based on market conditions and demand, Intel has decided to delay the construction of plants in Germany for two years. By the way, for one reason or another, she still delayed the start of construction. At first, this was hampered by uncertainty with subsidies, then nuances arose with the removal of fertile soil from the construction site, the search for specialists and expensive electricity.

The refusal to build a plant in Poland that would test and package chips is also conditionally temporary. As noted recently, local authorities agreed to provide Intel with about $1.9 billion in subsidies out of a total project budget of $4.6 billion. This is not the only chip packaging plant whose commissioning Intel will delay as part of its ongoing cost optimization program. The enterprise in Malaysia, which will complement the existing ones, although it will be built, will not yet be equipped with equipment. The enterprise building itself is not the main consumer of Intel’s financial resources; the equipment necessary for operation costs much more, so the company has long adhered to the strategy of advanced construction of enterprise buildings.

In addition, Intel is calling for its recently upgraded Fab 34 facility in Ireland to be considered its flagship site in Europe. EUV lithography has already been introduced here, the first time outside the United States for Intel’s production infrastructure. Here the company is able to use the Intel 4 process technology, which was previously considered 7nm in the generally accepted designation scale. Back in June of this year, Intel announced its intentions to refrain from building a new chip production plant in Israel, but this decision could have been influenced by ongoing hostilities in the region. The company made no mention of its Israeli operations this week. Previously, the company also had to abandon plans to build a research center in France and a chip testing and packaging facility in Italy. It is emphasized that in the United States, new Intel projects will continue to be implemented in Arizona, Ohio, Oregon and New Mexico.