The American chip company is trying its hand at being a contract manufacturer and is looking for customers for its new factory in Magdeburg.
Munich Intel is not having its own stand at the IAA motor show in Munich. The US chip manufacturer is still represented at a high level: Sales Director Christoph Schell is currently trying to get orders for the group’s new, 30 billion euro factory in Magdeburg.
Intel wants to operate on a large scale as a contract manufacturer on the Elbe. “Customers in Germany and Europe should ask themselves: How much dependence do I want on Asia?” Schell told Handelsblatt. So far, most companies have sourced their semiconductors from contract manufacturers, so-called foundries, in the Far East.
Schell, on the other hand, promises to offer the entire value chain in Europe in the future. The core of production takes place in Saxony-Anhalt, and the company is planning its own factory in Poland for around four billion euros for assembly and testing. Intel wants to supply customers more reliably than its competitors in Asia, who were unable to keep up with orders, especially during the pandemic.
Intel will take a two-pronged approach in the future
For sales director Schell, the IAA is almost a home game: the only German top manager at Intel comes from Kirchheim/Teck in Swabia. A year and a half ago, the business economist moved from the computer manufacturer HP to the second largest semiconductor company in the world.
So far, Intel has produced almost exclusively for its own needs. The group is the world’s largest provider of processors for PCs and notebooks. That is currently changing: “Intel is now taking a two-pronged approach,” explained Schell.
The Intel sales director is looking for customers for the new factory in Magdeburg.
The new production lines in Magdeburg are primarily intended to serve German and European customers. These can be chip manufacturers such as Infineon or NXP as well as industrial groups that design their own semiconductors. The model is the car brand Tesla, which has long been using chips it designed itself.
However, Intel has to prepare for fierce competition. The contract manufacturer Globalfoundries is also aiming for completely European production. The US company has been producing in Dresden for years and will in future package the semiconductors together with a partner in Portugal.
But that’s not all: TSMC, the world’s largest contract manufacturer, is setting up shop in Saxony and will therefore be able to advertise with the “made in Europe” label in the future. The Taiwanese have a huge advantage over Intel: They have already won major customers. Bosch, Infineon and NXP are involved in the ten billion euro factory on the Elbe.
Intel is already collecting an upfront payment
However, there is “a good response” to Intel’s foundry plans, assured Schell in Munich. The company received a large advance payment from a future customer, CEO Pat Gelsinger explained at a conference last week. However, the manager did not want to give the name of the client.
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For Intel, this is not just important as a sign to other potential customers. Since business is currently going badly, the Silicon Valley company can put the down payment to good use for its billion-dollar investments. Intel is currently building new factories in Arizona and Ohio. According to Schell, construction work in Magdeburg should start next spring at the latest. However, the EU has not yet approved the state subsidies: the federal government is supporting the settlement with around ten billion euros.
Planned Intel chip factory
New building in Magdeburg: Intel not only wants to manufacture for its own needs, but also work as a contract manufacturer.
Potential customers are very positive about Intel’s plans to become a successful contract manufacturer in Europe. “We need factories in different parts of the world,” Qualcomm boss Cristiano Amon told Handelsblatt. The cell phone chip specialist is TSMC’s second largest customer, just after Apple.
So far, the US company stands or falls with TSMC production in Taiwan. The San Diego company largely foregoes having its own factories. If the bands at TSMC stand still, Qualcomm is also paralyzed.
An attractive alternative for Qualcomm
The Intel factory in Europe is also attractive for Qualcomm because the company is increasingly doing business with the European auto industry. The US group supplies BMW, Mercedes and the VW Group, among others. Car companies are increasingly pushing for regional chip production in order to become independent of suppliers from Asia.
Intel wants to set itself apart from its foundry competitors by producing chips with the smallest structure sizes in Magdeburg. Such semiconductors are also finding more and more buyers in Europe because cars are becoming mobile computers and require correspondingly advanced chips. TSMC, on the other hand, wants to offer older generations of technology in Dresden.
More: The chip manufacturer wants to fill 3,000 positions in Magdeburg
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