Manufacturing Independence in the Age of the Cloud

Intel just announced a US$ 33B investment in creating chip manufacturing plants in Europe, about half of which will go to the (otherwise rather quaint) town of Magdeburg in Germany. In almost any respect this is good news. It creates jobs in Europe and Germany. It will instigate a local ecosystem of suppliers and entrepreneurs. Knowledge will diffuse and spread, creating more innovation, companies, and jobs.

To the tune that the factories won’t be in S/E Asia, it will also make the Western world more resilient and self-sufficient. However, it won’t make Europe more independent of the rest of the world, only of all the places that are not the United States (of America). Chip factories need software to run, and software increasingly runs in the cloud. If I were Intel, I’d design the factories in such a way that I can switch them off, for good, with the flip of a button in Santa Clara, California. The cloud lets you do just that. And it is only prudent to do so.

Of course this also goes the other way. If push came to shove, the German government could shut down the factories. For that reason, presumably, Intel also announced an equally large investment into a manufacturing plant in Ohio. This effectively helps the United States keep or regain said independence. Company and intellectual property dependencies quickly get complicated, but if Europe also wanted such independence, it nevertheless would need to headquarter the companies who own the manufacturing plants as well.

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