When Intel announced its IDM 2.0 strategy in general and its European expansion in particular back in April, it did not reveal many details about the plan. However, now that the details have transpired, they look truly ambitious: up to $100 billion in investments in multiple states and spread out across multiple facilities.
The Fab(s).
Intel has a multifaceted plan with European fabs, according to the Financial Times. Intel is set to build fab complexes TSMC-style in one area. According to FT, the intention is to build two phases, wait, and then build six additional phases for eight phases in total.
Fabs are costly. Intel is looking for a $20 billion semiconductor manufacturing facility somewhere in Europe with some major government support (we don’t know whether we’re talking about the first two phases, but given Intel’s production volumes, we can speculate that we are). There are requirements for Intel’s mainland Europe site, though: 1,000 acres of land, access to communications, and access to talent.
Over time, Intel says in an FT interview, it could build eight more phases. After that, the same area could develop to a $100 billion semiconductor manufacturing base, according to Intel.
The Supply Chain
But building a leading-edge semiconductor manufacturing facility is not Intel’s end plan; building a vertically integrated semiconductor supply chain is, according to Intel.
Intel’s vice-president of global regulatory affairs, Greg Slater, believes that Intel is well-placed to create an ecosystem-wide project. He also believes this project will benefit Europe.
Based on the information we have, Intel’s management proposes to build a vertically integrated supply chain with government subsidies in Europe. Vertically integrated supply chains do work in various economic modules. Will they work in IDM 2.0 mode? Only time will tell. Yet in any case, a supply chain is always beneficial for a state.
Summary
Intel’s multifaceted fab plan in Europe largely relies on government subsidies. The company certainly has massive plans, yet they depend on so many factors that the outcome is hard to imagine.
A modular approach to chip design enables Intel to make chiplets or tiles for its products using different process technologies at different fabs internally and externally, so in 2023, the company will take advantage of this by outsourcing some of its products to TSMC. Even before that, it will release its codenamed Ponte Vecchio compute GPU that will be produced using a variety of fabrication processes and will contain building blocks by Intel, TSMC, and Samsung Foundry.
At the same time, Intel’s decision to enter the contract semiconductor production business indicates that the company is confident of its ability to offer the best node in the future. Meanwhile, Intel needs its IFS business in a bid to stay on par with TSMC and Samsung Semiconductor in terms of scale.
For now, there are more questions than answers about Intel’s strategy for IFS as so far, the company has only announced intentions to build additional capacities around the globe and that it was interested primarily in lucrative advanced manufacturing technologies. Meanwhile, it is unclear how often Intel will be able to upgrade its fabs if it has long-term supply contracts with clients like the U.S. DoD.
