Intel delays construction of over $33B chip facility in Germany, Poland
An Intel chip. (Photo: picture alliance/dpa/HPIC)
U.S. chip manufacturer Intel has announced a two-year delay in the construction of its 30 billion euros ($33.42 billion) semiconductor manufacturing facility in Magdeburg, Germany. Intel CEO Pat Gelsinger shared the news in a memo to employees, citing demand uncertainties as the main reason for the delay.
Gelsinger stated that the company is postponing the start of construction on the facility by saying, “We recently increased capacity in Europe through our fab in Ireland, which will remain our lead European hub for the foreseeable future. We will pause our projects in Poland and Germany by approximately two years based on anticipated market demand.”
Intel’s European expansion plans
In 2023, Intel announced its intention to invest 30 billion euros in a semiconductor manufacturing facility in Eastern Germany as part of the company’s broader 80 billion euros investment plan for research, development, and production within the European Union over the next decade. The Magdeburg facility was a cornerstone of Intel’s strategy to boost semiconductor production in Europe.
The facility was expected to create 7,000 jobs during its construction and provide 3,000 permanent jobs once fully operational. Originally, Intel planned to invest 17 billion euros, but the investment nearly doubled to 30 billion euros as the project progressed.
Subsidies and EU approval
Intel had signed a memorandum of understanding with the German government for a 10 billion euro subsidy package to support the construction of the Magdeburg plant.
The EU Commission is currently reviewing the subsidy proposal, which is yet to receive final approval. A groundbreaking ceremony for the plant had been planned for this year, with the facility expected to be operational four to five years after receiving EU approval.
The European Chip Act requires the EU to mobilize 43 billion euros in public and private investment as well as introduce measures to help EU member states and international partners better prepare for and be able to counter future supply chain disruptions more rapidly.
Germany’s debate over subsidies
The delay has sparked discussions within Germany’s coalition government – which includes the Social Democratic Party (SPD), Green Party, and Free Democratic Party (FDP) – over the future of the billions of euros in subsidies earmarked for Intel.
Germany’s Minister of Finance Christian Lindner of the FDP, suggested reallocating the unused funds to address the 12 billion euro budget deficit for 2025. In a post on social media platform X, Lindner said, “Any funds not required for Intel should be allocated to reduce federal budget deficits. Anything else would not be responsible policy.”
However, Germany’s Minister for Economic Affairs and Climate Protection Robert Habeck countered Lindner’s suggestion, emphasizing the need for careful consideration of how the funds are used.
“The government will carefully evaluate how to allocate the funds in a way that benefits the country,” Habeck said, noting that the funds were originally allocated to the Climate and Transformation Fund (Ktf), which supports numerous climate initiatives important to the Green Party.
