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Intel has its eyes on Europe

Intel has its eyes on Europe

Intel has its eyes on Europe $INTC

The American chip giant wants to mobilize 8 billion euros in subsidies for the construction of a factory in Europe.

Intel (NASDAQ:INTC) CEO Pat Gelsinger was in Brussels and Germany last week to discuss the strategy for computer chips. The scarcity of this crucial gem has been plaguing manufacturers of electronics, cars, cloud, and 5G technology for months. The disruption will continue at least until the end of this year.

To avoid such crises in the future, Europe wants to gain control of the supply to the old continent. Today, Taiwan Semiconductor Manufacturing (TSMC) undeniably dominates the production of the most advanced semiconductors. TSMC (NYSE:TSM) has a market share of no less than 90 percent. Both Intel and TSMC will be in talks with the European Union today. The European Commission wants to convince them to bring advanced chip production to Europe.

But the Americans don’t just have plans in their homeland. They also want to build a factory in Europe. Intel CEO Gelsinger discussed this on Friday with the European Commissioner for Industry and Internal Market, Thierry Breton. By 2030, the Frenchman wants to double European chip production to 20 percent over the next ten years.

Chasing Elon Musk

It has not yet been decided where the European factory will be located. Gelsinger’s strategy is that of every CEO who promises new jobs: pitting countries against each other to obtain maximum subsidies. Tesla CEO Elon Musk did it two years ago when he let Germany, the Netherlands, and Belgium fight for the same leg.

That fight awaits another round. During his visit to Germany – with passages at BMW and Deutsche Telekom – Gelsinger declared to German economy minister Peter Altmaier on Thursday that the country is a suitable location for the factory. “Geopolitically, when you’re in Europe, you want to be in continental Europe,” noted news site Politico. In the same breath, the CEO added that he also looked at the Benelux countries. Gelsinger is aiming for 8 billion euros in government support for the construction of the factory.

The smaller the better

Today, Friday, there is also an appointment scheduled with Pat Gelsinger, Intel’s new CEO, and a video call with Maria Marced, head of TSMC in Europe. In concrete terms, this would concern a factory that can produce at 2nm.

The European Commissioner aspires to the production of the smallest chips of 2 nanometers, the target that the sector has set for itself by 2030. The billions of investments that this requires, find European chip developers wasted money.

The plan takes away funding for less advanced chips as 10-22 nanometers. These are older generations of semiconductors that are the biggest bottleneck in Europe and are needed for cars and healthcare equipment, it says.

Taiwan skeptical

Intel announced at the end of last month that it wants to invest twenty billion dollars in factories for chip production, one of those production sites will be Europe. The size and speed of these plans will probably partly depend on the European support that companies receive to expand here.

But the European ambition is not universally welcomed. According to Venturebeat, Taiwan’s Economy Minister Wang Mei-Hua is unimpressed. He is referring to TSMC’s statements that the most advanced chip development will continue to happen within Taiwan.

European chip companies also doubt whether the 2-nanometer target is feasible at all in Europe, as the region lags decades behind the rest of the world in terms of matter. ASML CEO Peter Wennink compares the construction of a 2 nm factory to the construction of a rocket to send people to the moon.

Price action

The price of the stock is bouncing off previous price supports, it is also bouncing off the 200d ema. But the trend shows some bullish movement in my opinion after retesting the $57.OO support area. Stock is gonna bounce again If the market goes well. Otherwise, it can drop to other support levels! After earnings, you should be looking for the gap to be filled. Also, keep an eye on the Fibb retracement at the 68 level.

The price target for me looks to be between $57 and $70 in the short term.

Read more news on The Simple Herald.

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