Intel just committed billions to make chips in Europe. TSMC might be next.

Intel announced a $36 billion expansion of its EU operation, including two fabs in Germany and an R&D facility in France.

Intel is spending an additional 12 billion euros on its manufacturing expansion in Leixlip, Ireland.

Intel’s EU plans form another plank in the company’s attempt to remake itself after years of struggle.

Photo: Intel Corporation

As the EU seeks to jumpstart its tiny chip manufacturing output, two chip titans — neither of which has roots in Europe — have set their sights on the bloc. Intel has now committed tens of billions of dollars to expansion there, but TSMC has been more circumspect, talking only about potential plans to build chip plants on the continent.

Intel sketched out the scope of its new investments Tuesday, committing up to 80 billion euros ($87.7 billion) in funding across a new factory site in Germany, a new French research and development facility, additional manufacturing in Ireland — where it already operates a factory — and investments in Italy, Poland and Spain.

Intel’s EU plans form another plank in the company’s attempt — costing hundreds of billions of dollars — to remake itself after years of struggle. Under CEO Pat Gelsinger, Intel has vowed to transform itself into the chip manufacturer for the world and open its factories to build processors designed by anyone who will pay. At the same time, it has committed to regaining its historic advantage in chip design tech with a renewed focus on innovation.

Lab workersWork began on Fab 34 — Intel’s new manufacturing facility in Leixlip, Ireland — in 2019. With production due to begin in 2023, the new facility will double Intel’s available manufacturing space in Ireland. Photo: Intel Corporation

Gelsinger’s plans buck what has become the conventional wisdom in the chip business: either stick to designing chips, or merely fabricate them, but not both. Fabless chipmakers make more business sense: Manufacturing is too hard, too expensive — a single advanced manufacturing tool runs as much as $360 million, and factories cost $10 billion apiece — and it's impossible to compete with the powerhouses of TSMC or Samsung, or so the argument goes.

But Intel has chosen to forge its own path. It will commit 17 billion euros to build two new manufacturing operations, or fabs, in Magdeburg, Germany. As a new site, Germany makes some sense, as it is home to automakers and several companies such as Infineon that supply chips used in vehicles.

Intel said the German fabs will produce chips with the company’s most advanced features, and it expects the plants to come online in 2027. The fabs will include a new hub the company is calling Silicon Junction that it says will serve as a connection point for manufacturing in the region.

“This broad initiative will boost Europe’s R&D innovation and bring leading-edge manufacturing to the region for the benefit of our customers and partners around the world,” Gelsinger said in a statement. “We are committed to playing an essential role in shaping Europe’s digital future for decades to come.”

The Leixlip, Ireland, fab will receive 12 billion euros of investment from Intel aimed at doubling the manufacturing capacity, and adding its most advanced extreme ultraviolet lithography manufacturing process. Intel said it is negotiating with the Italian government to build a back-end manufacturing facility in Italy, referring to the final manufacturing stages of testing and packaging. France will become the company’s European home for high-performance computing and AI design, as the company plans to build its R&D hub around Plateau de Saclay.

Intel’s plans mark a significant step for EU lawmakers, as the bloc has said it aims to double the size of the chip industry there. Policymakers in Europe passed a chip subsidies bill — something that lawmakers in the U.S. continue to push forward but has not been signed into law — and one of the goals was to attract a new fab from Samsung, Intel or TSMC. EU Commission President Ursula von der Leyen said in a video message Tuesday that Intel’s investment was the first major achievement under the EU Chips Act.

A rendering shows early plans for two new Intel processor factories in Magdeburg, Germany.A rendering shows early plans for two new Intel processor factories in Magdeburg, Germany. Credit: Intel Corporation

Unlike Intel, TSMC has been less eager to commit to a big new fab project in Europe. During the company’s most recent earnings call, chairman Mark Liu said the company was still assessing a potential site.

To make it worthwhile, TSMC needs to determine whether it would meet its customers’ needs, and whether it could serve them anywhere in the world, Liu said. In Taiwan, where the bulk of its factories are located, there is an ecosystem of supporting businesses, talent and infrastructure already in place.

But Taiwan’s government has become quite interested in Europe. It recently announced a commitment of $1.2 billion of tech investments in Lithuania, spread across a $200 million investment fund, and $1 billion for loans for various projects.

For Taiwan, tech investments in large part revolve around semiconductor manufacturing, as the country has staked its economic future on its ongoing leadership in the industry, according to Eric Huang, head of the Taiwanese Representative Office in Lithuania.

“I think we’re looking at different dimensions in how we can cooperate with European countries, especially Lithuania, but also Europe, which would like to develop some semiconductor manufacturing capabilities there,” Huang said in a recent interview. “So we will look at opportunities.”

Lithuania may sound like a random country in which to make a significant chip investment, but several businesses there make specialized laser technology that Huang said is useful for cutting up a specific type of silicon wafer used to manufacture chips used for electric vehicles.

When asked whether the war in Ukraine has changed Taiwan’s view of the safety of its European investments, Huang said, “We have a strong belief that NATO is a very strong international treaty organization. So if NATO is not reliable, which organization is reliable?”


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