Samsung is reportedly evaluating a potential European semiconductor expansion alongside its South Korea and US manufacturing base, as the region tightens local production requirements and Germany seeks a replacement for a cancelled flagship chip investment.
The debate is driven by two structural forces: Europe's push to localise strategic manufacturing, particularly for automotive supply chains, and the gap left after Intel cancelled its planned Magdeburg foundry project, forcing German officials to seek alternative investors.
Business Post noted that Samsung is expected to review options ranging from a full-scale fabrication plant to phased investments such as design support or advanced packaging, weighing supply chain access against Europe's structurally higher operating costs.
Intel exit reshapes Europe chip investment
Germany previously secured a EUR30 billion (approx. US$35.5 billion) Intel foundry project for Magdeburg and allocated about EUR10 billion in subsidies. Intel cancelled the project in July, citing foundry losses and weak demand, weakening the EU's plan to raise its global semiconductor production share from 10% to 20% by 2030.
The withdrawal has triggered coordinated diplomatic and industrial outreach. As G-enews noted, officials from Saxony and Saxony-Anhalt visited South Korea from February 9 to 13, including SEMICON Korea at COEX on February 11, to discuss cooperation with Korean semiconductor companies, including Samsung.
The outreach also supports Europe's remaining large-scale semiconductor project: TSMC's ESMC joint venture plant in Dresden. The EUR10 billion project, backed by TSMC, Bosch, Infineon, and NXP, targets automotive and industrial chips, with production scheduled for 2027.
Automotive demand drives Europe fab interest
Europe's automotive industry is the primary strategic draw. Germany hosts major global carmakers, including Mercedes-Benz and Volkswagen, alongside a dense network of automotive semiconductor customers and design partners.
Policy direction is becoming equally important. Europe is signalling a preference for locally produced semiconductors and is considering rules requiring up to 70% European-made components in certain products. Over time, this could reduce competitiveness for Korea-made automotive chips while strengthening the case for local production.
Samsung also has a system-level integration story. Harman recently acquired the ADAS business of Germany's ZF Friedrichshafen. Local chip production combined with ZF ADAS integration could support a fully European vehicle electronics supply chain.
Europe also offers supply chain proximity advantages. ASML's EUV tool supply base is located in the region, alongside automotive-focused chip designers such as NXP, Infineon, and STMicroelectronics, which could support closer engineering and commercial collaboration.
Cost pressure shapes Europe's expansion strategy
The main constraint is capital allocation. Samsung is already committed to long-term investments in South Korea and the US, including plans to invest about KRW300 trillion (approx. US$206 billion) over 20 years to build five advanced system semiconductor fabs in Korea.
Europe would introduce a third capital-intensive manufacturing region, with higher labor costs, higher energy prices, and stricter labor regulations that could raise unit costs and slow production ramp timelines.
A phased investment strategy is increasingly likely. Initial moves could include design support or advanced packaging rather than immediate leading-edge fab construction. Germany's ZVEI has also argued Europe should prioritise advanced packaging, chiplets, and design capabilities within the global semiconductor supply chain.
Execution capability underpins Europe strategy
Execution capability will determine whether Europe evolves from a sales region into a manufacturing base for Samsung. As ChosunBiz reported, Jun Young-hyun, head of Samsung DS Division and Memory business, has led a structural turnaround in Samsung's semiconductor business since 2024, including redesigning 10nm 1a DRAM and restructuring the foundry organisation to improve utilisation and customer pipeline stability.
The timing aligns with Europe's active push to attract Korean semiconductor investment and strengthens Samsung's positioning in potential negotiations.
EU–Korea partnerships accelerate chip supply links
Europe's outreach extends beyond government channels. The Korea Times reported that the EU Business Hub would host Semiconductors Korea 2026 in Seoul on February 11-12, featuring about 50 European semiconductor companies across design, manufacturing, materials, equipment, and packaging.
Taken together, Germany's policy outreach and EU-led industry matchmaking are accelerating supply chain integration between European and Korean semiconductor ecosystems.
For Samsung, the strategic decision is whether Europe becomes a long-term manufacturing base or remains primarily a market destination. Intel's withdrawal has created negotiating space for Germany, while Europe's localisation policies and Samsung's global capital commitments will shape the final decision.
Article edited by Jack Wu
