Intel, the American multinational corporation that designs and manufactures advanced chips and other technological products, has recently announced its plans to build a cutting-edge chipmaking facility in Germany. The company has also announced a $15 billion expansion in operations in Israel. These plans are part of Intel’s capital investment spree, demonstrating that the company is not slowing down anytime soon.
The German plan comes after Israeli Prime Minister Benjamin Netanyahu announced a $15 billion expansion of operations, in addition to $10 billion already announced, but delayed due to the Covid-19 pandemic. The German and Israeli facilities will create high-tech hubs, boosting employment and downstream technology industries. This is in addition to the broader strategic goals of lowering dependence on Asian based chipmakers, such as TSMC.
The German Deal and Israeli Expansion
The German deal comes after Intel sought greater support from the German government and was successful in receiving nearly 10 billion euros worth of incentives and subsidies. Intel says the deal involves “increased government support that includes incentives, reflecting the expanded scope and change in economic conditions since the site was first announced.” The German fabs are set to be built in Magdeburg, Saxony-Anhalt, and will be equipped with leading-edge Angstrom era manufacturing capabilities. These facilities will create a first-of-its-kind, leading-edge end-to-end semiconductor manufacturing value chain in Europe, serving European customers and helping to fulfill the EU’s ambitions for a more resilient semiconductor supply chain.
Details around the Israeli facility are a little more vague, as the deal is said to be agreed to “in principle”. It’s set to be built in Kiryat Gat, where Intel already has fabs. Intel has facilities in Haifa too, including one that was toured by Jacob Ridley in October 2022. The Israeli Ministry of Finance said Intel is expected to hire thousands of additional workers in Kiryat Gat and has agreed to increase the corporate tax rate it will pay to the state from 5% to 7.5%. It aims to begin operation by 2027.
Despite Intel’s struggles to meet its sales targets amid a downturn in the PC market and wider economic concerns, the company sees fab capacity as critical to its long-term future. Intel Foundry Services is a division of the company that seeks to build chips from other companies. As demand for high-performance computing products soars, driven by AI and big data, Intel aims to cash in on these booming markets. It is possible that we might see Nvidia GPUs made in Intel fabs, and that our next AMD Ryzen chip could be manufactured by Intel. With billions of dollars in contracts up for grabs, anything is possible.
Intel’s latest plans to build a cutting-edge chipmaking facility in Germany and expand operations in Israel demonstrate the company’s commitment to growth and innovation. These plans will boost employment and downstream technology industries while helping to fulfill the EU’s ambitions for a more resilient semiconductor supply chain. Despite the challenges that Intel faces, the company remains optimistic about its future and aims to cash in on the booming markets of high-performance computing products.