(Bloomberg) — Intel Corp. will dedicate production at its plant in Ireland for the manufacture of chips for automakers as the company pushes into a growing market currently buffeted by shortages that have crippled vehicle production. The Santa Clara, California-based chipmaker has a facility in County Kildare in Ireland that has been used for manufacturing its mainstay computer processors. Intel will convert an unspecified amount of that plant’s output to producing other companies’ designs aimed at the automotive industry, Chief Executive Officer Pat Gelsinger said in a presentation in Munich Tuesday.
Automakers are redoubling efforts to secure semiconductors after the pandemic triggered shortages that will cost $110 billion in lost sales this year, according to Alix Partners. The crisis stems from poor planning during the pandemic and limited chipmaking capacity, but it’s been compounded by shrinking available cargo space and new outbreaks of the delta variant that are hobbling factories in Southeast Asia.
At the same time, advanced safety features and a shift to electric vehicles that’s happening faster than anticipated are fueling increased demand for automotive chips. That’s forcing auto executives to overhaul supply chains and rethink how they source the components.
Intel didn’t give a time line for when the capacity and other plants its planning for Europe will come online, meaning it’s not clear whether the initiative can help automakers in the short term with the current issues. Longer term, Gelsinger is looking to forge a relationship with a group of companies that are increasingly important to the chip industry in a business that is becoming ever more dependent on the tiny electronic components. By 2030, more than 20% of the cost to build premium cars will be from chips, up from the current 4%, Gelsinger said. The total market for silicon in autos will reach 11% of the entire semiconductor market, totaling $115 billion, according to Gartner Inc.. Intel said it’s working with automakers and their suppliers to try to provide capabilities that will speed up their ability to make use of its factories. Under Gelsinger, Intel is trying to break into the business of outsourced production and directly take on Taiwan Semiconductor Manufacturing Co. Intel gets the majority of its revenue from selling the computer processors it designs and makes in house. Much of the rest of the chip industry farms out production.
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