Future Chip Demand Demands Future Capacity

Foundational to IDM 2.0 is investing in a global semiconductor supply chain that is resilient, diverse and anticipates the needs of tomorrow.




​During a November 2022 visit, leaders from Intel Corporation gather with German officials on land where Intel plans to build a semiconductor manufacturing plant. Looking over plans for the site near Magdeburg, Germany, are (from left): Intel CEO Pat Gelsinger; Sandra Stieger, deputy for economic affairs, City of Magdeburg; Eamonn Sinnott, interim vice president, Site Manufacturing and Operations, Intel; Reiner Haseloff, minister president of Saxony-Anhalt; and Jürgen Ude, state secretary of Saxony-Anhalt. (Credit: Intel Corporation)

This week, Intel signed the purchase agreement to become a landowner in Magdeburg, Germany, the planned site for our next European semiconductor manufacturing facility. We also signed Bechtel as our general contractor for Intel’s new Ohio site already under construction. We are excited about this progress. Let me explain why we continue to advance our new site plans and remain committed to adding leading-edge manufacturing capacity in the European Union and U.S. against the backdrop of current economic conditions.

Intel’s IDM 2.0 strategy requires sustained investment in a global semiconductor supply chain that is resilient and geographically balanced. During the COVID-19 pandemic, we saw how global demand and supply shocks could bring the economy to a virtual standstill.

Semiconductor manufacturing is especially vulnerable given that 80 percent of current capacity is concentrated in one small geographic region. Our strategy is the industry’s strategy: Diversify our footprint today to bolster the chip supply needed for tomorrow.

Press Kits: Intel Invests in Ohio | Intel Plans Investments in Europe

This is not a challenge to be solved overnight – or even in a few years. Best-in-class semiconductor facilities – or fabs – take three to five years to build. And that’s after you have the land, the construction team and the vision for where that capacity is most needed. We believe Europe and the U.S. are regions that can support and would benefit from stronger semiconductor ecosystems.

Since we announced plans to build new semiconductor fab sites in Germany and Ohio, much has changed: geopolitical challenges have become greater, semiconductor demand has declined, and inflation and recessionary pressures are disrupting the global economy. We must acknowledge the abrupt change in the environment while investing to help rebalance the global silicon supply and prepare for the future. Our hope then – and now – is that we can grow our U.S. and EU manufacturing capability and help create a more vibrant and healthier chip ecosystem.

This means investing now for a future we know is coming. A future in which nearly everything becomes digitalized. A recent report projects semiconductor demand to increase 5% every year until 2030, at which time the semiconductor industry is expected to have a total addressable market of $1 trillion. That’s double what the market demand is today.

We are carefully monitoring market conditions and working closely with government partners on the best way to advance our plans in Magdeburg and Ohio. Accordingly, we will time big expenditures to meet market needs. This is a careful balance that requires public-private cooperation across much of the semiconductor industry on a scale not seen in decades.

We cannot wait for market demand to return before investing in the capacity we’re going to need tomorrow. Following Intel’s smart capital strategy, we will continue to invest in space and initiate equipment investment based on demand, technology and product readiness milestones. By planning our future footprint today, we will be that much farther ahead when the economy roars back.

Keyvan Esfarjani is executive vice president and chief global operations officer at Intel Corporation.