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Intel no longer considering UK semiconductor factory

Intel CEO Pat Gelsinger has told the BBC that the company is no longer considering building a chipmaking factory in the UK, following its exit from the EU.

The company, one of the world’s largest semiconductor manufacturers, is currently pushing to boost its own chipmaking output amid a global shortage.

Intel plans to expand its US chip-manufacturing operations with a $20bn investment towards two new factories in Arizona and a colossal $95bn investment in new and upgraded semiconductor factories in Europe over the next 10 years.

Gelsinger told the BBC that before the UK left the single market, it “would have been a site that we would have considered” and that Intel “absolutely would have been seeking sites for consideration” in the country. However, post-Brexit, “we are looking at EU countries and getting support from the EU”.

He said that Intel has approximately 70 proposals for sites across Europe, covering around 10 countries, and hopes to agree on a site and subsidies before the end of 2021. Gelsinger added that Intel hopes to secure subsidies in the US and EU, on the basis that dependence on East Asian chipmaking weakens supply chain resilience and could, in some cases, threaten national security.

“It is clearly part of the motivation of a globally balanced supply chain that nobody should be too dependent on somebody else,” he said.

The global chip shortage has been caused by coronavirus impacts and the ongoing US-China trade war, and continues to affect production of cars, phones, gaming consoles, and other products.

Gelsinger warned in June that the chip shortage could take many years to be resolved. He repeated his warnings in his BBC interview, commenting that shortages and hiked prices associated with the shortage were set to continue into the Christmas season: “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 opined that there may be incremental improvements in 2022, but supply chains were unlikely to stabilise before 2023.

The US and UK governments have identified securing resilient, trustworthy semiconductor supply chains as critical for national security. For instance, US President Joe Biden is trying to pass a $190bn spending package to strengthen domestic R&D in the face of competition from China. It is accompanied by an emergency fund of $54bn for the commerce department to boost US production and development into semiconductors and telecoms hardware, mainly in the next five years.

The overall market for semiconductors is expected to more than double in the next seven years to around $800bn.

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