European Central: Poland Next European Nation To Have Semiconductor Plant
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Poland has been a growth engine for years in the European Union and had over 30 years of economic growth until its GDP shrank in 2020 due to the pandemic. The EU member state recently has received more positive economic news. Intel has chosen the nation as the site of a new semiconductor plant. 2,000 workers will be employed at the plant along with requiring thousands of workers for the construction of the factory. Intel already employees 4,000 workers in Poland and has been present in the nation for 30 years. The plant will be located near the city of Wrocław, in southwestern Poland near the German border. The plant is expected to be ready to start manufacturing semiconductors by 2027. Intel will invest up to $4.6 billion (4.2 billion euros) into the plant.
Several nations were competing for the site, yet Poland was chosen partially due to its infrastructure. Italy is still in discussions for an Intel semiconductor plant in the region of Veneto. Intel has stated that there is still the chance the Italian plant will be built as well as it would focus more on the back end of the production of semiconductors. Intel has been renegotiating subsidies for a plant to be constructed in Germany. The German government already agreed to providing 7.44 billion dollars (6.8 billion euros) in subsidies to build the plant, but Intel has been renegotiating this amount due to an increase in labor and material costs since the cost of the planned facility was first estimated.
Intel’s Expansion In Europe
Intel is expanding across three continents including Europe in order once again become the dominant producer of semiconductors. It was the largest producer of semiconductors until 2021 when it was passed up by Samsung. Its gross margin has also been decreasing for the past ten years yet its expansion efforts can help reverse this trend. Intel is also constructing plants in Germany, France, and Ireland. This could essentially end Europe’s dependence on Asia from semiconductors, which would be beneficial. During the pandemic when there were delays in manufacturing and shipping in Asia, this led to a shortage of semiconductors in the rest of the world. The European Union aims to produce 20 percent of semiconductors by 2030, double the percentage it currently produces.
Poland’s Investments In Infrastructure
Besides Intel mentioning infrastructure as a reason why Poland was chosen for a semiconductor plant, other sources confirm that the nation’s investment in infrastructure has helped propel its economic growth. Only a year after joining the European Union as a member state in 2004, Poland had only 500 kilometers of high-speed roads. Some of these high speed roads were inherited from Germany when Poland’s borders changed after World War II. Ten years later, the nation had over 3000 kilometers of high-speed roads. Poland has continued to construct between 300-400 kilometers of motorways per year and reached 5,000 kilometers by the end of 2022. Besides funds from the EU making it possible to invest in roads, Poland was almost motivated to make road construction a priority due to hosting the European football championship along with Ukraine in 2012. It is estimated that within five to six years Poland will have the same kilometers of roads per capita as France and Germany.
Railways initially were declining in importance after the fall of communism in Poland in 1989 yet this trend has reversed. In 2019, there were 28 percent more passengers on Polish railways than in 2010. There are currently some concerns however about how efficient investments are in Polish railways due to metrics such as reducing the travel time of passengers not improving. Poland will continue to invest in its railways and expects to build 1800 kilometers of new high-speed rail between 2024 and 2027. Investments in rail is not only important for Poland but also for Ukraine in order to integrate the EU candidate country into the EU’s transportation network. Poland will need to work on resolving its political dispute with the EU in order to unblock funds from the bloc which will be necessary in order to make investments in Polish infrastructure possible. The head of the EU’s Directorate-General for Mobility and Transport, Kristin Schmidt believes that Poland could have the EU’s most modern railways within two decades.
Poland has also been investing in air travel and currently has 13 international airports. The country continues to expand its air travel capacity in Warsaw but there are questions about what solution is the best. The current plan revealed by the government in 2018 is to close the two current airports Chopin and Modlin and to construct a mega airport. The CEO of Ryan Airlines has called the project stupid and instead thinks that the two current airports should be expanded rather than tearing them down. The problem for Chopin however is that it is in the Warsaw metro area and houses surround the airport making it difficult to expand. Instead, the plan is for the mega airport to be opened in phases and to reach a capacity of 100 million passengers annually. This would put the new Warsaw airport in the same league as Charles De Gaulle, Schiphol, and Heathrow. The Polish government aims to open the new airport by 2027 but there are doubts about whether this is a realistic timeline. There are also some concerns that the airport may never need to have a capacity of 100 million passengers, or at least for a long time. Compared to the figures first hypothesized two years before the pandemic, the airport would reach 40 million passengers by 2035, five million less than the initial estimate. In 2060, the airport would reach 65 million passengers. Rather than a mega airport, the Modlin airport, which is located 37 kilometers North of Warsaw, can be expanded, however in order to help cope with Chopin’s difficulty to expand.
While Poland may be tempted to construct infrastructure megaprojects as a way to call attention to the country, this may not be the wisest choice financially. The financial side is particularly important in an EU member state which has seen its population decline due to workers moving to other nations for higher wages. This leaves the EU member state with a smaller tax base to pay for grandiose projects. While companies such as Intel want the infrastructure necessary to efficiently move its products throughout the nation and world. Wasteful megaprojects could make companies nervous about the political climate in Poland and lead them to look elsewhere. Finally, if infrastructure investments are spread out within the nation, the Polish government could spread prosperity throughout the nation.
