Intel wants another 5 billion euros in subsidies for the construction of a chip factory in Germany
Below the Chip lawthe EU aims to end its dependence on China and produce 20% of the world’s semiconductors by 2030. Amid the political pressure, attracting world giants to invest in the union’s domestic production has been a key strategy – with Intel’s plan to build a massive French fries plant in Germany’s Magdeburg regarded as a major boost for the bloc. .
But now Intel is asking the German government for another €4 billion to €5 billion in grants to move forward with the project, Bloomberg reportsciting people familiar with the matter.
In March 2022, Intel announced an initial investment plan of more than €33 billion (up to €80 billion within the next decade) to strengthen the EU’s semiconductor industry across the value chain. This included the mega site in Germany, a new chip research center in France, a back-end manufacturing facility in Italy and the expansion of the existing chip factory in Ireland, the laboratory in Poland and the supercomputing center in Spain.
Construction of the highly anticipated semiconductor plant in Magdeburg was delayed late last year due to economic hurdles stemming from high energy prices and inflation following Russia’s war against Ukraine, the report said.
Intel had initially estimated the project would cost $17 billion and agreed on $6.8 billion in government grants. Now, however, the company expects to spend €30 billion, requiring further government support. It is also open to tax breaks or energy subsidies.
Don’t miss TNW Valencia in less than 3 weeks!
The heart of technology comes to the heart of the Mediterranean – March 30 – 31
“Disruptions to the global economy have led to higher costs, from building materials to energy,” Intel said in a statement. “We appreciate the constructive dialogue with the federal government to address the cost gap that exists with building in other locations and make this project globally competitive.”
According to Bloomberg, Intel is also likely to delay its project in Italy and is currently in talks with the Italian government. On the positive side, the research center in France and the expansion of the facility in Ireland appear to be on track.
Ursula von der Leyen, President of the European Commission, labeled Intel’s investment as “the first major achievement” under the new Chip Act. “It makes a significant contribution to the European chip ecosystem that we are currently building,” she says noticed after the tech giant’s announcement.
The continent’s weak position in the global semiconductor market was especially evident during the pandemic, demonstrating that chips are an integral part of the EU’s digital and green transitions and its geopolitical agenda. But while the bloc has managed to attract some investors, it seems that making their project fully possible still remains a challenge.
