Intel launches ‘largest investment in Polish history’

Top executives of the American chipmaker Intel and the Polish government announced a €4.2 billion investment in the Lower Silesian region on Friday (16 June) following last year’s launch of a massive investment plan spanning Germany, Poland, France, Spain, Italy and Ireland. 

The COVID-19 pandemic led to a global chip shortage, pushing the EU to implement a plan to achieve “strategy autonomy” in the semiconductor industry.

Poland’s Prime Minister Mateusz Morawiecki attended the official announcement conference to welcome the “largest investment in Polish history,” telling US Ambassador to Poland Mark Brzezinski that it will also reinforce “transatlantic ties.”

To boost domestic chipmaking capacity, the EU recently passed the  Chips Act, designed to set the framework for state aid subsidies for new facilities, so-called mega fabs, to ramp up Europe’s semiconductor sector.

At the same time, smaller member states have questioned this relaxation of Europe’s state aid rules, considering that only the countries with deeper pockets are able to put on the table the financial resources to secure costly new investments.

However, Morawiecki did not mention the amount of public money used to secure the project.

Questioned by EURACTIV about this absence of communication, Keywan Esfarjani, chief global operations officer of Intel, called the subsidy “hard to quantify” because it will not just take the form of direct subsidy.

As is often the case, the Polish government has also committed to building the infrastructure the facility will need regarding energy and water consumption, transportation networks and skilled workers.

This will be a major challenge for Poland, as Intel is committed to using 100% of renewable energy by 2030 and being a net zero facility, meaning it will be CO₂ neutral,  by 2040, in line with EU green targets.

Indeed, Poland’s energy mix is still largely dependent on coal, according to the National Energy Regulatory Authority (URE), and the production of renewable energy in 2022 was a mere 12.5% of the total.

Unlocking EU funds

Ramping up Warsaw’s green energy capacity might be particularly challenging since its European post-pandemic economic recovery funds (RRF) have been frozen since 2021.

The European Commission stated it would unblock the funds, expandingif Poland addresses its rule of law issues, with reform of the Supreme Court being the first major milestone.

To unlock the €35.4 billion, the Polish ruling party (PiS) pushed a law through the Polish lower chamber, the Sejm, but failed to find an agreement that would satisfy the European Commission.

Esfarjani told EURACTIV that he was “very confident” that environmental and production targets would be met. He stressed that the new facility would be “the only Intel semiconductor assembly and test plant” in Europe.

In his view, this is consistent with Intel’s global strategy of having production sites close to its end customers and building more reliable and resilient value chains.

He explained that Miękinia, the chosen city in the Wrocław suburban area, is an ideal environment for a facility producing products for end consumers. It lies 500km from two mega fabs in Magdeburg, Germany, that will supply the Polish plant and 500km away from the 40,000 employees strong R&D plant in Gdańsk.

In Magdeburg, the infrastructural project has led to controversy as the chipmaker asked for more funding following the rising inflation and energy costs.

Asked about potential cost overruns, like in Intel Magdeburg, Esfarjani repeated his “confidence” in the sound cost stability of the Polish project despite the fact inflation in 2022 was higher than 13%.

He also enumerated why the Lower Silesian region was chosen: a cost-competitive place with a “great talent base”, a good infrastructure, an excellent business environment and universities, quoting Wrocław, Kraków and Warszawa.

Morawiecki said he was pleased that this investment would drive Intel suppliers to invest in the Lower Silesian region, creating thousands of indirect jobs for Poles and Ukrainian refugees.

Esfarjani confirmed that Intel’s ambition was to “create a melting pot of the best talents”, from technicians with a two years degree to employing PhDs “solving very complicated computer chip engineering, device and reliability issues.”

Esfarjani assured that when Intel decides on investment, this is for the long run.

The design and planning phases of the project shall begin soon, while construction is pending European Commission approval and is planned to be completed by 2027.

[Edited by Luca Bertuzzi.Alice Taylor]