Global chip race touches off spending spree, led by Intel’s US$50 billion worth of new plants

The global race to build domestic semiconductor factories and sever dependency on overseas suppliers for these critical components is spurring a spending boom, and the biggest beneficiaries so far are arguably the chip makers.

Just in the last week, Intel has made announcements about more than US$50 billion in new plants in Poland, Germany and Israel, spurred on by government incentives.

Combined, the US, the European Union, Japan and India have committed more than US$100 billion in subsidies to attract the likes of Intel, Taiwan Semiconductor Manufacturing Co (TSMC) and Micron Technology.

For chip makers, the subsidies represent an important hedge against rising costs while they work to reshape the global manufacturing landscape. For the governments, the plants mean jobs, investment in infrastructure and supply-chain security for the semiconductors needed for everything from automotive production and mobile phones to home appliances. Confronted with Russia’s invasion of Ukraine and China’s perennial threat to take over Taiwan by force, they are betting that more plants in more countries insulates them against disruptions.

Intel’s biggest outlay in Europe will be its €30 billion (US$32.8 billion) plant in Germany, where it negotiated a subsidy package valued at about €10 billion.