EU warns of chip subsidy race as Intel weighs plant

Ireland competing with other european countries to secure major new Intel manufacturing facility

Taoiseach Micheál Martin is pictured with Intel CEO Pat Gelsinger at the construction site of Intel’s latest manufacturing expansion in Leixlip, Co. Kildare in September. Picture: Marc O'Sullivan

Chipmakers may play off governments “against each other” for subsidies to fix semiconductor shortages, the European Union’s antitrust chief Margrethe Vestager warned.

While such action is tempting for companies in the current circumstances, it “risks letting taxpayers –- whether European or American -– pick up the bill, and get little from it,” she said in a speech today.

Vestager’s words seem targeted at Intel which is chasing European support to help build more local chip capacity. 

The tech giant announced in March that it was looking to build major new manufacturing facilities in the US and Europe that will create up to 10,000 jobs. Intel already employs more than 5,000 people at its sprawling 360-acre Leixlip, Co Kildare facility and at a site at Shannon, Co Clare.

Ireland, which has been at the centre of Intel's European manufacturing for over 30 years, has been competing with a number of countries, most notably Germany, to secure the European investment.

Vestager, who polices government funding for industry, said state aid can only be justified if necessary to start a project, if benefits are shared widely and without discrimination across the EU.

The European Union would need to invest up to €330bn upfront to fully supply its own chip demands, Vestager said.

“Self sufficiency is an illusion” that would lead to “more expensive chips and a negative impact on all kinds of markets,” she said.

She called instead for a diversified supply chain with international efforts to assess vulnerabilities and early warnings for potential shortages. Co-ordinated export controls are also needed, she said, a reference to US measures that some European officials have blamed for worsening chip shortages.

Bloomberg