Intel CEO says ‘big, honkin’ fab’ planned for Europe will be world’s most advanced

“We wanna build a big, honkin’ fab in Europe,” the Pennsylvania native said in an interview this week during his visit to an auto industry trade show in Germany.

Since returning in February after nearly a decade as CEO of VMware, Gelsinger has wasted no time hatching big, honkin’ plans to remake Intel. In recent years, the onetime undisputed champion of chipmaking has fallen behind its younger competitors, who were quicker to spot the potential of smartphones.

The massive chip fabrication project is one of those big plans, and it’s central to Gelsinger’s strategy, known as “IDM 2.0”, a new, improved version of its fully integrated business model that would see Intel not only design and assemble its own chips as before, but serve as a foundry building semiconductors for rivals as well. 

It is a strategy that could present an enormous opportunity to make up ground lost to the competition—as well as pose considerable risks to investors were something to go wrong. 

A $95 billion mega-fab

Breaking ground on the 10-year–plus chip manufacturing project, which could ultimately cost a mind-boggling €80 billion ($95 billion) to complete, could begin in 2022, according to the self-confessed “semiconductor geek,” with the first wafers running off the line as early as the middle of the decade.

In the final stage of its expansion, when all eight manufacturing facilities (or “modules”) are finished, Gelsinger told Fortune the site would be akin to a small city. By then, he expects it to employ in excess of 10,000 people directly and potentially support another 90,000 jobs across the area, including jobs at suppliers as well as restaurant workers and schoolteachers.  

The location, which he hopes to pick from a short list of more than 10 candidates before the year is out, won’t just be gargantuan in scope, however.

According to Gelsinger, it will also be the most advanced chip fab anywhere on the planet, featuring technology currently under development at Europe’s own leading semiconductor equipment supplier, ASML. 

“By the time this mega-fab is up and running, we’re going to be in what we call the angstrom era,” he said, referring to a unit best used for measuring individual atoms and equivalent to one 10-billionth of a meter.

Thanks to an agreement the Intel CEO struck with his immediate counterpart at ASML, whom Gelsinger has already met three times face-to-face in the six months since taking the helm, the Intel facility should be the first to employ the Dutch company’s upcoming “high numerical aperture” EUV chip-printing machines. (ASML customers Taiwan Semiconductor Manufacturing Co., known as TSMC, and Samsung are on a waiting list, however.)

This second generation evolution of ASML’s extreme ultraviolet photolithography can reduce the size of transistors—the building blocks of integrated semiconducting circuits—to just 20 angstroms (Å). That would make them less than a third in length of the current seven-nanometer nodes found in many of today’s smartphones. 

“We might do some other nodes like three and four nanometer, but we would center the design of the facility on Intel 20 Å technologies, and then go below to 18 angstroms, 14, etc. as we build out future modules,” Gelsinger said.

U.K. ruled out

The new Intel chip center is exactly the kind of prestigious project U.K. Prime Minister Boris Johnson aims to bring to his country as part of his drive to make it a global tech hub, and the U.K. is already a semiconductor innovator in its own right thanks to cutting-edge chip designer ARM. Yet the Intel boss ruled out situating the mega-fab there, given that an individual country on its own would not have the financial firepower to help Intel realize its plans without the added backing of a supranational body like the European Union.

“We’re only considering the EU,” he clarified, pausing on each of the two letters to ensure there could be no confusion. “To have the capital at this level, it has to be an EU-level project. The market has to be an EU-level market.”

In the EU, Intel would also benefit from the strong industry expertise clustered around Western Europe, which is home to key suppliers ASML and Zeiss, as well as research institutes like IMEC in Belgium, Leti in France, and Fraunhofer in Germany.

Gelsinger would not divulge his preferred location for the new fab, beyond noting that “I need ground, I need a big plot, I need energy, I need talent, and I need water supply.” 

Industrial-scale water consumption has recently been a vexing regulatory hurdle for Tesla’s massive electric vehicle and battery cell Gigafactory outside Berlin, which is under construction even as it waits for final approval. Electricity costs in the country are also among the highest in Europe owing to the subsidized transition away from coal and nuclear toward clean, renewable power.

The new factory would be Intel’s second in Europe, where it has already plowed $22 billion in investments into its Leixlip chip fab in Ireland’s County Kildare since 1989.

‘More important than oil’

Gelsinger has gone on an international road show to raise money from taxpayers to fund his company’s rapid catch-up, a fundraising pitch that’s been aided by fears across the West of a strategic dependence on Asian suppliers such as TSMC, the world’s preeminent foundry for fab-less chipmakers.

In the process, he’s met with Chancellor Angela Merkel of Germany, French President Emmanuel Macron, and Italian Prime Minister Mario Draghi, as well as other heads of government from the Netherlands, Belgium, Ireland, and Poland, an EU country outside the euro area.

For European politicians, the bait is twofold. Having the fab inside the EU would not only minimize the risk of another economically damaging semiconductor shortage that has crippled car production, it could also restore their local chip industry to formal glory by employing the most advanced technology available anywhere.

Back in 1990, roughly 44% of the world’s semiconductor supply still came from the continent. It collapsed to just 9% today, however, and continues to dwindle further. With Intel’s help, Gelsinger believes Europe can account for 20% by the end of the decade. 

“If all these pieces come together, this will be a magical European success story,” he said.

Of course, that is so long as the EU and its member states offer hefty incentives that are competitive with the kind of handouts common from governments like Taiwan, which has aggressively pursued the industry. The minimum starting bid that Intel expects is a contribution of 40% of the initial €20 billion investment for the first two out of eight production modules.

The Intel CEO has already met with a number of policymakers including Bavaria’s own governor to extract pledges of support for the billions that taxpayers would have to stump up to lure the company to their shores. His trumpeting of angstrom-sized transistors made in Europe might also spur the Biden administration into opening its own purse strings for the chipmaker’s benefit.

“Every aspect of human existence is becoming digital, and everything digital runs on semiconductors. I would argue the most important thing—for human existence, for economic sovereignty, for national security—is a secure and resilient semiconductor supply chain for the future,” Gelsinger argued. 

They’re even more critical than that other resource known to have sparked wars, revolutions, and coups around the globe.

“God decided where the oil reserves are, we get to decide where the fabs are,” he said.

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