More deindustrialization of Europe? Or company milking subsidies?
Intel Corp. will delay construction of its planned German chip plant and is seeking more in government subsidies, Volksstimme reported.
The US-based chipmaker earlier this year announced plans for a mega site worth €17 billion ($18 billion) in Magdeburg. Construction was set to begin by mid-2023, and the government planned to provide €6.8 billion in state aid.
The cost has now risen to €20 billion, according to Volksstimme. Intel no longer has a planned start date for construction and wants the German government to increase subsidies, according to the report.
While Intel has not made any official announcements about a delay, it said in a statement Saturday that “much has changed” since the company disclosed plans to build in Magdeburg. “Geopolitical challenges have become greater, semiconductor demand has declined, and inflation and recession are disrupting the global economy,” according to the statement.
The company is monitoring the situation and “will pace these investments with the market,” it said. “We cannot predict the market recovery, but we do know it will recover as it always has in the past after a down cycle.”
The European Union has an ambitious goal of producing 20% of the world’s chips by 2030. The Chips Act is still moving through the legislative process but has already prompted a number of companies to make investments, of which Intel was the largest. High energy prices, a market downturn, and even subsidies from the US Inflation Reduction Act could threaten the plans.
The 'Chips Act' at the end is referring to the EU's version, not the US one with a similar name “CHIPS and Science Act” that already passed this year.
Here was the original March 2022 press release of INTC announcing its €33B investment into Europe. It included:
Intel plans to invest an initial 17 billion euros into a leading-edge semiconductor fab mega-site in Germany, to create a new R&D and design hub in France, and to invest in R&D, manufacturing and foundry services in Ireland, Italy, Poland and Spain.
It followed the January 2022 announcement of $20B invested in Ohio.
Leave a Reply