Intel will invest nearly $90 billion in Europe’s chipmaking industry

The tech giant said on Tuesday that it will spend an initial €17 billion ($19 billion) to create two new chip factories in Germany. Construction on the site in northeastern city of Magdeburg — which it will name «Silicon Junction» — is expected to begin next year and start operations in 2027.

«This broad initiative will boost Europe’s R&D innovation and bring leading-edge manufacturing to the region,» Intel’s CEO Pat Gelsinger said in a press release.

The company plans to pour money into every part of the chip supply chain — including research, manufacturing and packaging — with investments also going to France, Ireland, Italy, Poland and Spain.

With its initial wave of investment of more than 33 billion euros ($36 billion), Intel expects to create about 5,500 jobs at the company, plus thousands more in construction and at suppliers and partners.

The new factories will deliver chips using Intel’s most advanced transistor technologies to supply foundry customers as well as its own products.

A severe shortage of semiconductor chips has plagued tech companies and carmakers over the past year as economies reopened from pandemic lockdowns and demand for goods increased. The tiny chips are found in a raft of consumer products, including smartphones and washing machines.

Germany’s Volkswagen said in October that the chip crunch had helped shave 12% off its third-quarter profits. That same quarter, Stellantis, the maker of multiple car brands including Fiat and Citroën, said it produced about 600,000 fewer vehicles year-over-year due to the shortage.

In recent months, the European Commission has ramped up its efforts to secure chip supplies. In February, the Commission said it planned to funnel €43 billion ($47 billion) of public and private investment into the industry as part of its proposed European Chips Act.

The European Union currently accounts for 10% of the global chip market, but could represent 20% by 2030 if the Act is adopted, the Commission said in its proposals.

«The EU Chips Act will empower private companies and governments to work together to drastically advance Europe’s position in the semiconductor sector,» Gelsinger said.

Intel currently employs around 10,000 people throughout the European Union.