Intel to Invest 110 Trillion Won to Build Two New Factories in Europe

[Asia Economy Reporter Yujin Cho] U.S. semiconductor company Intel will invest up to $95 billion (approximately 110 trillion KRW) over 10 years to build two new semiconductor factories in Europe to address the global semiconductor supply shortage. Intel, which re-entered the foundry (semiconductor contract manufacturing) business earlier this year, is aggressively expanding its business based on the high growth prospects of automotive semiconductors. The competition with Samsung Electronics and Taiwan's TSMC for the lead is expected to become even fiercer.

According to the Wall Street Journal (WSJ) on the 7th (local time), Intel CEO Pat Gelsinger announced, "We plan to build two semiconductor factories in Europe," adding, "We may further expand the plan to establish factories in Europe."

At the IAA auto show held in Munich, Germany, CEO Gelsinger said, "As we enter a new era of continued semiconductor demand, bold and big thinking is necessary."

WSJ reported that Intel's investment comes amid explosive growth in semiconductor demand for computers, automobiles, and home appliances. In particular, it is an aggressive bet on the future growth potential of the automotive semiconductor market, which has suffered supply shortages since the COVID-19 pandemic.

Intel CEO Gelsinger predicted that the automotive semiconductor market will double over the next 10 years. He especially forecasted that the proportion of semiconductors in the material costs of premium cars will soar from 4% in 2019 to over 20% in the future.

Earlier, rival and the world's No. 1 foundry company Taiwan's TSMC announced plans to invest $100 billion over the next three years to build six factories in the U.S. Samsung Electronics also announced last month that it would significantly expand its production capacity, intensifying the global competition surrounding the semiconductor market.

The global semiconductor supply shortage that began after the COVID-19 pandemic last year dealt a heavy blow to automakers. U.S. leading automakers General Motors (GM) and Ford decided to reduce production in North America due to severe supply shortages.

As a result, production of popular GM models such as pickup trucks, vans, and crossovers is expected to be disrupted, and Ford's sales of representative models like the F-150, Ford Expedition, and Lincoln Navigator SUVs have inevitably been affected. Japanese Toyota also decided to cut global production by 40% this month, and major global automakers are struggling due to semiconductor shortages.

Intel's large-scale investment plan in Europe came just six months after announcing in March that it would invest $20 billion to build two factories in Arizona, U.S., and invest $3.5 billion to expand its factory in New Mexico.

Having declared its re-entry into the foundry business earlier this year, Intel is accelerating its political moves by leveraging the semiconductor supply shortage crisis. CEO Gelsinger said, "We need to correct the playing field tilted toward Asia," and has been meeting with leaders of the U.S. and Europe to demand subsidies in exchange for establishing semiconductor manufacturing facilities in their countries as part of its business expansion strategy.

This content was produced with the assistance of AI translation services.