Intel says it will alter its spending for plants based on ‘market needs’

Despite a weakening global economy, Intel has stated it will keep constructing new chip production facilities because it is crucial to expand supply chains and increase capacity when it anticipates a recovery in semiconductor demand.

Through a Monday editorial penned by Keyvan Esfarjani, the head of Intel’s global operations, the giant reaffirmed its assurance to its billion-dollar manufacturing developments in Europe and the USA.

What did Keyvan Esfarjani stated?

Esfarjani didn’t state it explicitly, but his blog appeared to be aimed at skeptics who question whether Intel is moving forward with the plans for large projects in Germany and Ohio when there are gluts of chips due to a drop in electronics demand over the last few months and shortages of others.

For its enormous fab locations in Ohio and Germany, Intel is anticipated to get significant government subsidies from the US, the EU, and local governments.

Additionally, some may doubt the wisdom of spending government money on the new manufacturing facilities in light of the company’s recent decline in quarterly revenue.

Esfarjani writes, “Much has changed since we declared the plans to develop new semiconductor sites in Ohio and Germany: geopolitical concerns have increased, semiconductors’ demand has decreased, and recessionary forces and inflation are hurting the global economy.”

Esfarjani, one of the key representatives for Intel’s expansion plans, stressed the need to continue investing in more capacity while “acknowledging the dramatic change in the environment.”

What does the analysis suggest?

Esfarjani referenced research from the Semiconductor Industry Association (a USA lobbying group) supported by Intel, alongside other chip firms, which predicted a 5% annual growth in semiconductor demand through 2030.

According to the analysis, the industry’s overall addressable market will grow to $1 trillion by the decade’s end, which is almost twice the current demand.

However, Esfarjani did say that Intel will “schedule major expenditures to meet market needs,” suggesting that the development of its fab ambitions in Ohio and Germany will rely on how the economy changes.