Intel invests 80 billion dollars in a new computer chip factory. Here’s why.

Europe is embarking on a crucial mission, seeking to gain political power over its own technology by investing $80 billion in a computer chips factory located in Dresden, Germany. The semiconductor industry is one of the most valuable and complex in the world, and Europe’s move aims to reduce its reliance on Taiwan, where currently 50% of the world’s semiconductors and 90% of the most advanced computer chips are produced. This strategic decision, backed by the German government, delves into the political battle for microchips. In this article, we take a quick look at the geopolitics of this decision.

The significance of microchips cannot be overstated. Under Moore’s Law, the number of transistors on these chips doubles every year, leading to remarkable advancements. To illustrate this, Intel engineers calculated what would happen if a 1971 Volkswagen Beetle improved at the same rate. The numbers get a bit crazy.

“These are the numbers: Today, that Beetle would be able to go about three hundred thousand miles per hour. It would get two million miles per gallon of gas, and it would cost four cents!” ~Thomas Friedman, 2015

Political importance of computer chips

For the United States, which is competing with China in the technological and political arena, securing access to advanced computer chips is of paramount importance. Relying on other countries for this crucial technology poses political risks, hence the German government’s initiative to invest around 10 billion euros in a new chip factory near Dresden.

Energy dependency on Russian gas has exposed vulnerabilities in the system for all involved European countries. To achieve greater economic autonomy, focusing on the chip production supply chain becomes a logical step.

Governor Reiner Haseloff, the minister of the relevant area, emphasised the importance of Europe’s self-sufficiency in strategic technologies. He stated,“we cannot allow strategic technologies to take place and be made in Asia or exclusively in America, but we as Europe must have a certain self-sufficiency and also be able to provide decisive key products ourselves,”

The construction of these chip factories is projected to conclude in 2027, prompting the question: Is this investment a wise decision or a squandering of funds?