On July 23rd, according to Politico, Intel has suspended several major investment projects in Europe due to financial losses. This includes plans for semiconductor fabs in Italy and R&D facilities in France, with focus shifting to investments in Ireland and Poland.
Since Pat Gelsinger took over as Intel CEO in 2021 and launched the IDM 2.0 strategy, aiming to expand global production capacity, the company has faced significant short-term losses despite expectations of long-term growth. Investments in U.S. capacity and increased production costs have led to a sharp decline in profits. In 2023, Intel’s revenue fell 14% year-over-year to $54.2 billion, with net profit plummeting 79% to $1.7 billion, and adjusted profit down 36% to $4.4 billion.
Intel had negotiated with the Italian government in 2022 to build a $5 billion packaging and testing facility, expected to create 1,500 direct jobs and 3,500 indirect jobs, partly subsidized by the Italian government. However, their expansion plans in Italy were further hindered by the failure of their acquisition deal with Tower Semiconductor, linked to Italy’s STMicroelectronics.
In addition to these challenges, Intel’s plans for a research and design center near Paris have been suspended due to economic and market conditions. Despite these setbacks, Intel remains committed to future development in France. Their semiconductor fab investment project in Germany also faces delays related to environmental and subsidy issues.
Despite the pause on some projects, Intel continues with investments in Germany and Poland. In Germany, they are constructing a large fab complex with an initial investment of €30 billion, while in Poland, a €4.6 billion advanced chip packaging plant in Wrocław is planned, complementing operations in Germany.
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