People familiar with the matter revealed that Intel wants the German government to invest another US$5 billion (currently about 34.7 billion RMB) in building a chip manufacturing plant in eastern Germany.
It is reported that Intel has previously reached an agreement with the German government to build a chip manufacturing plant in Magdeburg, so it has received a total of 7.2 billion US dollars in government subsidies. But the subsidy has yet to be approved by the European Commission. Due to the poor global economic situation, Intel delayed the start of the project late last year and is now seeking more investment from the German government.
“Global economic conditions have led to rising costs from construction materials to energy,” Santa Clara, California-based Intel said in a statement. Constructive dialogue with the strength of our efforts.”
Under Chief Executive Pat Gelsinger, Intel has embarked on a massive capacity expansion aimed at regaining leadership in the semiconductor industry.
Last year, the European Commission announced the “EU Chip Act”, which plans to invest 43 billion euros in the European semiconductor industry. The United States also has a $50 billion plan to subsidize domestic chip manufacturing. But Intel’s projects in Germany are facing delays.
Intel has been competing with rivals such as TSMC and Samsung Electronics for relevant government subsidies, so early approval of projects is crucial for the company. Last year, Intel announced local business expansion plans in Europe totaling 33 billion euros, including setting up a research center in France and expanding the company’s existing chip factory in Ireland.
The most important plan is to build a new chip production base in Europe. In the case of local subsidies higher than other European sites, Magdeburg, Germany became the location of Intel’s new factory. However, European energy prices have fluctuated greatly in the past year, and the resulting inflation has led to soaring construction costs.
Germany’s Economy Ministry declined to comment on its talks with Intel, but pointed to the EU’s goal of producing 20 percent of the world’s chips by 2030.
“With this goal in mind, the German government is prepared to invest billions of euros in support of Germany’s semiconductor industry and in the construction of new factories,” the Ministry of Economy said, adding that any additional investment would require approval from the European Commission.
Intel originally estimated the German project would cost 17 billion euros, but now expects it to cost 30 billion euros, according to people familiar with the matter. Like most projects that will receive government funding through the European Union’s Chip Act, Intel expects the Magdeburg project to receive about 40 percent of the subsidy, the people said. While Intel is trying to win direct investment from local governments, it is open to other government assistance, including tax breaks or energy subsidies, they said.
Meanwhile, Intel’s business expansion in Ireland and France remains largely on schedule, according to people familiar with the matter.
