Intel dismisses UK as factory location because of Brexit
Only the EU member states are being considered to host a new European facility, says CEO Pat Gelsinger
American chipmaker Intel is no longer considering the UK as a location to build a large new chip factory, due to issues stemming from the decision to leave the EU.
Intel CEO Pat Gelsinger told the BBC that the UK "would have been a site" the company would have considered before Brexit, but it is no longer a part of Intel's $95 billion (£70 billion) global expansion plans.
Gelsinger, who became Intel CEO in February, said the company is only considering EU member states to host a new European facility. The firm currently has "about 70 proposals for sites across Europe, from maybe 10 different countries," and hopes to reach an agreement on a site before the end of the year.
Intel plans to invest up to $95 billion on opening and upgrading semiconductor plants in Europe over the next 10 years, as well as boosting its output in the US.
In July, we heard that the chip maker was looking for a European site with at least 1,000 acres of land that can support up to eight fabs, while also providing access to an appropriate talent pool.
The company hopes to build at least one factory for manufacturing and one for advanced packaging in Europe. Belgium, France, Germany and the Netherlands are some of the potential hosts , and Intel is expected to name sites by the end of the year.
Our analysis
By Tom Allen, Delta Site Editor
We are now truly seeing the fallout from the Brexit vote. Despite Boris Johnson's continued insistence that "we want high-wage, high-skilled jobs," the initial system shock has promoted anything but, with mass shortages of healthcare staff, care workers and HGV drivers that cannot be blamed on the pandemic - and now a prime high-skill manufacturing investment cut off.
The pre-Brexit UK could have been a viable location for Intel and other technology firms. We are no longer a manufacturing nation, but what is left in the country is highly technical and skilled, such as satellite components. We were seen as the gateway to Europe by US and Asian firms; and we have excellent access to international shipping lanes from ports like Tilbury, Felixstowe and Liverpool. All of these factors would have made the UK at least a feasible choice for a new silicone wafer plant to serve the rest of Europe.
But manufacturing needs supply chain resilience, as the pandemic has proven. Without being able to guarantee cheap, easy and robust cross-border trade, there is nothing to stop tech giants bypassing the UK entirely in favour of Ireland, Germany, or Eastern Europe.
Intel's plans to expand in the EU come amid a global semiconductor shortage that has hit the supply chains of all types of goods, from cars to computers.
Last month, automaker Toyota slashed global production targets by 40 per cent. Many other manufacturers, including General Motors, Nissan, Ford, Honda and Jaguar Land Rover, have also been forced to slow or temporarily stop production at some plants this year.
The chip shortage has also led to increased prices of many goods where microchips are vital components.
Gelsinger said the chip crisis could last until Christmas.
"There is some possibility that there may be a few IOUs under the Christmas trees around the world this year.
"Just everything is short right now. And even as I and my peers in the industry are working like crazy to catch up, it's going to be a while."
He added that chip supply would "incrementally" improve in 2022 but is unlikely to stabilise until 2023.
Intel is hoping for government subsidies in the US and European countries, which have become reliant on Asia for chip-making needs. Around 70 per cent of the world's chips are produced in Taiwan and South Korea.
"It is clearly part of the motivation of a globally balanced supply chain that nobody should be too dependent on somebody else," Mr Gelsinger said.
The EU is looking to double its global share of chip production from 10 per cent to 20 per cent, and for that, it needs to attract at least one of the world's top three chip makers - TSMC, Intel or Samsung - to invest in new foundries.
In the US, Intel operates four 'wafer fabs' that are located in Massachusetts, Oregon, New Mexico and Arizona.
In March, Intel announced plans to invest $20 billion on new chip facilities in the US to become a global foundry giant, competing with industry titans TSMC and Samsung.