Intel will dedicate production at its plant in Ireland for the manufacture of chips for automakers as the company pushes into a growing market currently buffeted by shortages that have crippled vehicle production.
The U.S.-based chipmaker has a facility in County Kildare in Ireland that has been used for manufacturing its mainstay computer processors.
Intel will convert an unspecified amount of that plant’s output to producing other companies’ designs aimed at the automotive industry, CEO Pat Gelsinger said in a presentation at the IAA Munich auto show on Tuesday.
Gelsinger said Intel could invest as much as 80 billion euros ($94.77 billion) in Europe over the next decade to boost the region’s chip capacity.
He said the company would announce the locations of two major new European chip fabrication plants by the end of the year.
There is speculation about possible production sites, with Germany and France seen as leading contenders while Poland, where Intel also has a presence, also in the picture.
Intel did not give a time line for when the capacity and other plants its planning for Europe will come online, meaning it’s not clear whether the initiative can help automakers in the short term with the current issues.
Gelsinger the aim was for a “total project of 80 billion euros ($94.77 billion) over the next decade that would be a catalyst for the semiconductor industry… a catalyst for the entire technology industry.”
Intel, the biggest maker of processor chips for PCS and data centers, in March said it planned to open up its chip factories for outsiders to use.
Gelsinger told Reuters in April that the company wanted to start producing chips for automakers within six to nine months to help alleviate a shortage that has disrupted vehicle production around the world. It is unclear whether the latest announcement means Intel will meet that goal.
Europe innovation center
Intel views automakers as a key strategic priority. Currently the company gets the majority of its revenue from selling the computer processors it designs and makes in house. Much of the rest of the chip industry farms out production.
The company said it is working with automakers and their suppliers to try to provide capabilities that will speed up their ability to make use of its factories.
“Cars are becoming computers with tires. You need us and we need you. The aim is to create a center of innovation in Europe, for Europe,” Gelsinger said.
Gelsinger said Tuesday that the company believes chips will make up 20 percent of the cost of vehicles by 2030, a five-fold increase from 4 percent of the cost in 2019.
The total market for silicon in autos will reach 11 percent of the entire semiconductor market, totaling $115 billion, according to Gartner.
Intel is trying to break into the business of outsourced production and directly take on Taiwan Semiconductor Manufacturing.
Its “Foundry Services Accelerator” is aimed at helping automakers learn to make chips using what Intel calls its “Intel 16” chip manufacturing technology and later move to its “Intel 3” and “Intel 18A” technologies.
Those manufacturing processes would be far more advanced than most of the processes currently used in the automotive industry.
Intel said that nearly 100 automakers and key suppliers, including BMW, Volkswagen, Daimler and Robert Bosch, had expressed support for its programs. An Intel spokesman declined to confirm whether any had committed to becoming customers.
Gelsinger has been quoted saying Intel wants the EU to commit state aid to Intel’s proposed European investment drive.
Automakers are redoubling efforts to secure semiconductors after the pandemic triggered shortages that will cost $110 billion in lost sales this year, according to Alix Partners.
The crisis stems from poor planning during the pandemic and limited chipmaking capacity, but it has been compounded by shrinking available cargo space and new outbreaks of the delta variant that are hobbling factories in Southeast Asia.
At the same time, advanced safety features and a shift to electric vehicles that’s happening faster than anticipated are fueling increased demand for automotive chips. That’s forcing auto executives to overhaul supply chains and rethink how they source the components.
Bloomberg and Reuters contributed to this report