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Intel moving to make foundry investment in Europe

Intel is moving to make a foundry investment in the European Union. Intel’s CEO Pat Gelsinger met with European leaders, including French President Emmanuel Macron and German Chancellor Angela Merkel from June 30 to early July. Gelsinger will decide where Intel will build its foundry facilities in Europe through the meetings with them.

Industry watchers say that Samsung Electronics may be affected by Intel’s moves. Samsung is the second-largest company in the global foundry market after TSMC in Taiwan. However, analysts say that the Korean chipmaker will inevitably be affected in terms of market share and price negotiating power. This is because global foundry customers can gain an upper hand in price negotiations when they secure many foundry companies.

Gelsinger said at the “Evolve Conference” hosted by CNBC on June 16 that he will lay out a plan to make a large foundry investment in the United States or Europe within 2021.

Gelsinger visited Europe for the purpose of making an investment in semiconductor plants. European media outlets report that Intel is looking for a place to build six to eight plants over the next 10 to 15 years. Intel’s investment is expected to reach between US$10 billion and US$15 billion. Each of the foundry plants is expected to create 1,500 jobs.

European leaders such as Macron and Merkel met with the Gelsinger to attract Intel’s investment. Governments of European countries are considering subsidizing 20 to 30 percent of Intel’s investment.

The U.S. government is behind Intel’s foundry investment as it is trying to reduce geopolitical risks by lowering America’s dependence on Asia for semiconductors.

Intel already announced in March that it will invest US$20 billion to build two new foundry plants in Arizona. They are expected to run starting from 2024. Gelsinger said in March that it is important to secure manufacturing capabilities in the United States and Europe because most semiconductor production facilities are currently concentrated in Asia.

Analysts say that the reason why European governments are competing to attract Intel foundry plants is similar to that of the United States. Securing jobs is also important, but critics say European fabless companies are overly dependent on Asian production facilities.

Also, foundry customers such as fabless companies will like to have more foundry companies as they can secure stronger negotiating power. Cristiano Amon, president of Qualcomm, welcomed Intel’s IDM 2.0 Plan as it will provide important options for the semiconductor industry. He said Qualcomm is looking forward to forging a partnership with Intel in the future.

However, even if Intel builds the foundry plants, it takes more than 3 years to complete, so there is still time for Korean companies such as Samsung Electronics and SK Hynix to respond to Intel’s moves. “Samsung Electronics has already announced its plan to invest in building large foundry plants in the United States.” said an industry insider. “In particular, it will not be easy for Intel to have semiconductor facilities and manufacturing know-how due to the advancement of micro-fabrication processes.” Business Korea

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