Intel, Micron plans to spend billions on new chip plants outside US

Washington is seeking to strengthen key supply chains outside of China as it works to contain Beijing's geopolitical ambitions


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By Bloomberg News

Intel Corp. and Micron Technology Inc. are planning to spend billions of dollars on new chip plants outside of the US, highlighting a global race to diversify supplies of critical components amid tensions with China. 
Intel Chief Executive Officer Pat Gelsinger flew to Wroclaw, Poland, to announce a new $4.6 billion chip facility in the 1,000-year-old university town, marking a record US investment in the country. Micron is close to an agreement to commit at least $1 billion toward setting up a semiconductor packaging factory in India, people familiar with the matter said. 

Washington is seeking to strengthen key supply chains outside of China as it works to contain Beijing’s geopolitical ambitions. The US is pushing to build advanced chipmaking at home and in friendly countries as growing global tensions spur concerns about the world’s reliance on Asian centers, such as Taiwan, which China claims as part of its territory.

Companies are also taking advantage of subsidies from foreign governments eager to make sure the supply of chips in their own territories is safe and attracts jobs. A mismatch in demand and supply at the height of the Covid-19 pandemic caused widespread shortages that rippled out into industries such as autos and consumer electronics, driving home the risks of vulnerable chip supply chains. 

Intel gained a little less than 1% in New York trading Friday morning. Micron slipped 2.6% after it said about half of its sales tied to China-headquartered clients may be affected by a cybersecurity probe being carried out by the Chinese government.

Intel is set to get nearly €10 billion in subsidies from the German government for a chipmaking complex in the eastern part of the country, according to people familiar with the matter who said negotiations on the aid will run through the weekend.

“It’s good news that many companies are currently making big investment decisions with regard to the semiconductor industry in Germany,” German Chancellor Olaf Scholz said at a press conference in Berlin. “If all these plans become reality, a lot will come together here.”

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Scholz will host Intel’s Gelsinger at an event in Berlin on Monday. 

Micron on Friday also announced it would be plowing another $600 million into an existing packaging facility in central China at a time when Beijing has banned its chips from critical domestic infrastructure. The brief statement, posted in Chinese to the local social media service WeChat, touts the creation of jobs and benefits for the domestic economy but didn’t elaborate on other goals. 

The announcement came just weeks after Beijing’s decision to curb Micron’s semiconductors on cybersecurity concerns.

First Published: Jun 16 2023 | 9:49 PM IST

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