© Reuters. FILE PHOTO: Intel CEO Pat Gelsinger poses after an interview in Wroclaw, Poland June 16, 2023. REUTERS/Karol Badohal/File Photo
By Karol Badohal and Supantha Mukherjee
WROCLAW, Poland/STOCKHOLM (Reuters) – Poland’s third-largest city, Wroclaw, beat rivals last week to house Europe’s next multibillion-dollar Intel (NASDAQ) chip factory, with a campaign of two years promising grants, infrastructure, talent and a slice of American life.
Faced with an unprecedented shortage of semiconductors, Europe is offering billions of euros in subsidies to reduce its dependence on Asia. In return, Intel is committing large sums and with Germany already investing 30 billion euros, Poland has decided to crush the party.
Its eventual success can be seen as a lesson in perseverance.
The US chipmaker said last Friday that it had decided to invest up to $4.6 billion in the new semiconductor plant near Wroclaw.
Interviews with half a dozen Polish government officials and business leaders revealed previously untold details of how a small town in southwestern Poland ticked all the boxes to get what its Prime Minister called it the biggest investment in its history.
Poland initially impressed Intel executives with how quickly it responded to questions and addressed concerns, Intel said.
“When we started the process, we didn’t consider Poland,” Intel CEO Pat Gelsinger told Reuters.
“While you’re choosing a location, imagine you’re going on a date. You get the feeling that they really want it to work,” Gelsinger said. “We definitely came away with a firm belief that the local government wants this to work.”
Poland began courting Intel in July 2021. Government and city officials met with the company several times over the next two years, according to interviews with five Intel officials and three executives.
Two government agencies – the Polish Investment and Trade Agency (PAIH) and the Industrial Development Agency (ARP) played a key role in the process, officials said.
Many meetings were conducted remotely due to COVID-19 restrictions, officials said. Marcin Fabianowicz, Director of the PAIH Investment Center then met with an ARP representative and two senior Intel executives.
“After the first meeting (in person), I was convinced that Poland had a chance to get the project,” he said. “Discussions have been warm and are going in the right direction.”
But when Intel announced its European investments in March 2022, Germany was given a large factory in Magdeburg, while Intel told Poland it would only expand its existing facility in Gdansk.
Poland was undeterred and finally struck a deal at a two-day meeting last month, officials said.
“We never said something couldn’t be done,” Fabianowicz said.
Dubbed “Project IQ,” government and city officials have been secretly working on strategies to lure the chipmaker.
A team from a development promotion agency in Wroclaw made a presentation highlighting its quality of life, family facilities, schools, cycle paths, swimming pools and economic and demographic data.
Intel executives were also impressed that Wroclaw is home to Poland’s American soccer and basketball champions.
‘SNOWBALL EFFECT’
Intel’s new factory will be on 285 hectares of land, next to another chip factory, the edible variety made by PepsiCo (NASDAQ:) and a factory that makes windows.
The global shortage of semiconductors has impacted the production of everything from mobile phones to electric vehicles, a shortage that is expected to continue throughout 2023, according to the European Parliament, as it takes two to three years to build a new chip manufacturing plant.
The land of Wroclaw is divided between two municipalities – Miekinia and Sroda Slaska.
The region will invest in new roads to the factory, electric buses, a water treatment facility and high-voltage power lines, Sroda Slaska Mayor Adam Ruciński told Reuters.
Intel was also allowed to build buildings 50 meters tall, more than the usual 20-meter restriction, he said.
Poland hopes to entice other companies like Taiwan Semiconductor Manufacturing Corp (TSMC), the world’s largest contract chipmaker, to invest in the country.
Talks with TSMC began last year, several officials said.
“We are at a point where we get our 5 minutes (of fame), so a lot of entities are interested,” said Jakub Mazur, deputy mayor of Wrocław. “The snowball effect with Intel’s entry will cause the Taiwan leadership talks to come back to us.”
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