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Recently, the American political news website Politico published an article stating that after suffering serious losses, the US semiconductor giant Intel has suspended its investment plans in France and Italy, which has dealt a blow to Europe's chip manufacturing ambitions.

To avoid a repeat of the semiconductor shortage that occurred during the pandemic due to over-reliance on Asian supply chains, the EU has been pushing to create diversified chip supply channels, with Intel being a key player. In 2022, Intel plans to invest tens of billions of euros in building new microchip factories or R&D facilities in Germany, Poland, Ireland, Spain, France and Italy.

Many plans were soon implemented. In June 2023, Intel announced an investment of $4.6 billion to build a semiconductor packaging and testing plant in Poland; a few days later, it announced a milestone expansion of 30 billion euros to build a wafer plant in Germany. As "the largest foreign investment in German history", this project has been promised 10 billion euros in subsidies by Germany.

German Chancellor Scholz (back right) shakes hands with Pat Kissinger (back left), CEO of US technology company Intel, on June 19, 2023. German Chancellor State Secretary Kuchis (front right) and Intel Executive Vice President Esfariani (front left) also shook hands after signing the agreement between the German government and Intel. (Odd Andersen/AFP via Getty Images)

In France, Intel has also selected a site southwest of Paris as a new R&D center for artificial intelligence (AI) and high-performance computing (HPC), with a planned workforce of 450 and due to open by the end of 2024.

In Italy, Intel plans to invest up to 4.5 billion euros to build a chip packaging and assembly plant in 2022. The plant is expected to start operation between 2025 and 2027 and will create 1,500 jobs for Intel and 3,500 jobs for suppliers.

Intel also planned to expand its business in Italy through Israeli chip company Tower Semiconductor. In 2024, Intel's filing with the U.S. Securities and Exchange Commission on April 2 showed that Intel's chip foundry business will have an operating loss of $7 billion in 2023, about $1.8 billion more than its loss in 2022.

Intel Chief Executive Pat Gelsinger said in a speech to investors that 2024 will be the worst year for operating profit for Intel's chipmaking business, which he expects to break even by around 2027.

But the current crisis has had a huge impact. Intel's promised investments in France and Italy cannot be realized for the time being, and industries worth billions of euros and the thousands of jobs that could be created cannot be realized for the time being.

Intel said in a statement that it has "paused investments in France," citing "significant changes in economic and market conditions" since 2022. Intel added that the "scope" of the project is currently being adjusted and that France remains an option for Intel's future R&D center.

Intel's plan to build a chip factory in Italy is also unlikely to be realized in the near future. When asked about the status of the Italian factory, Intel said it was currently "focusing on its active manufacturing projects in Ireland, Germany and Poland." Italian Commerce Minister Adolfo Urso said in March this year that Intel had postponed its investment in Italy.

Now, people can only wait and see what happens in eastern Germany, where Intel's €30 billion wafer factory will work closely with the €4.6 billion semiconductor packaging and testing plant being built in Poland.

However, the approval of the 10 billion euros in subsidies planned by the German government was delayed by the European Union. The German government has not yet formally sought a new subsidy plan, and environmental organizations and the city government have also raised 13 objections to the Magdeburg wafer factory project. Although Intel still stated that the preliminary construction measures have been approved and site preparation work can be started, it is difficult to hide the fact that it is in trouble due to delays. The vision of European countries for a "vibrant, sustainable and cutting-edge" semiconductor industry is still a long way to go.

This article is an exclusive article of Observer.com and may not be reproduced without authorization.