(Bloomberg) – Intel Corp. will dedicate production at its plant in Ireland to the production of chips for car manufacturers, while the company is pushing into a growing market that is currently suffering from shortages that have crippled vehicle production.
The chipmaker, based in Santa Clara, California, has a plant in County Kildare in Ireland that was used to produce its main computer processors. Intel will turn an unspecified amount of the plant’s production into the production of other automotive-focused companies ’designs, CEO Pat Gelsinger said at a presentation Tuesday in Munich.
Carmakers are redoubled efforts to secure semiconductors after the pandemic caused 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 chip production capacity, but has been exacerbated by a reduction in available cargo space and new outbreaks of the delta variant shaking factories in Southeast Asia.
At the same time, advanced safety features and the transition to faster-than-expected electric vehicles are fueling increased demand for automotive chips. This forces car managers to rethink supply chains and rethink the way they supply components.
Intel has not given a timeframe for the capacity and other facilities planned for Europe to be announced, meaning it is unclear whether the initiative can help carmakers solve current problems in the short term. In the long run, Gelsinger seeks to establish a relationship with a group of companies that are increasingly important to the chip industry in a business that is becoming increasingly dependent on small electronic components.
Gelsinger said that by 2030, more than 20% of the cost of building a premium car will be from chips, compared to the current 4%. According to Gartner Inc., the total car silicon market will reach 11% of the total semiconductor market, for a total of $ 115 billion.
Intel said it is working with carmakers and their suppliers to try to provide opportunities that will accelerate their ability to use its factories. Under Gelsinger, Intel is trying to penetrate the outsourcing business and directly take over Taiwan Semiconductor Manufacturing Co. Intel makes most of its revenue by selling computer processors that it designs and manufactures itself. Most of the chip industry does not produce production.