Intel's announcement comes after the European Commission last month set out plans to encourage chip manufacturing in the European Union, with proposed new legislation to ease state aid rules for chip factories and enable $17 billion in additional public and private investment.
During the 1990s, the EU accounted for nearly 20 percent of the world’s silicon wafer production, according to figures cited by Brussels. Now it has fallen to about 10 percent.
The EU has now set itself the ambitious goal of making 20 percent of the world’s chip supply by 2030 -- quadrupling its production.
'Begging for money'
Chipmakers are looking to build more factories to make advanced chips for use in premium smartphones like Apple's latest iPhones that use chips with 5-nanometer technology. A nanometer is just several atoms wide.
Bernstein Research analyst Stacy Rasgon was confident Intel could manage the roll out of investments to match demand going forward, and was positive on expanding with government subsidies.
Intel "is using capacity as a strategic weapon. Part of the strategy right now is to go around the world and beg for money," Rasgon said. "If there's any time to run around the world begging for money to build semiconductor manufacturing facilities now is the time."
Intel did not specify how much money it is receiving from EU governments to expand into their countries.
Intel has already committed to increase spending on new U.S. factories at an existing site in Arizona and new location in Ohio.
Gelsinger has called on governments to recognize the security risks of the concentration of production in Asia.
His vision for Intel in the future is of a company that manufactures semiconductors for other companies, even rivals, and that does it with the best production technology. By committing to Europe and Germany, Intel can speed up the acquisition of new customers.
"Today 80 percent of chips are produced in Asia," Gelsinger said. "Our pan European investment addresses the global need for a more balanced and resilient supply chain. We are planning to bring the most advanced technology to Europe and helping EU create the a next-generation European chip ecosystem."
Bloomberg contributed to this report