The funding came after German Chancellor Olaf Scholz (above right) offered a €10bn subsidy to pay for the megafactory. Credit: Sean Gallup/Getty Images Europe
Intel reports multibillion-dollar spending in Germany as part of nearly £50bn of microchip investments in Europe and Israel announced just days apart.
€30bn (£26bn) in new funding agreed in exchange for a €10bn subsidy offer from German Chancellor Olaf Scholz will cover a “megafactory” — a huge semiconductor manufacturing plant — in the city of Magdeburg. The plant will be put into operation within four years.
On Sunday, the US tech company also announced a $25 billion (£19.5 billion) investment in a new chip manufacturing plant in Israel, as well as a $4.6 billion deal in Poland.
Germany's offer of generous government support comes weeks after British officials confirmed a £1bn 10-year strategy to support UK semiconductor investment. one executive called him “downright lethargic”.
Europe rolled out the red carpet for the semiconductor sector, offering billions of euros in subsidies to attract investment from the industry's biggest companies.
In 2021, Pat Gelsinger, an Intel chief executive, took a decision against the UK regarding the company's new post-Brexit semiconductor factories. He told the BBC at the time that the UK “would be a place we would consider” but “after Brexit… we are looking at EU countries and getting support from the EU.”
Intel CEO Pat Gelsinger has ruled against the UK over the company's new semiconductor plants after Brexit. Credit: Karol Badochal/REUTERS
On Monday, the head of Intel said the tech giant plans to build a “Silicon Node” in Magdeburg. He said the facility is “a critical part of our Intel growth strategy.”
“Combined with last week’s announcement of our investment in Wroclaw, Poland, and the Irish sites, where we are already operating on a large scale, this creates a corridor of capacity from wafers to finished packaged foods that is second to none,” said he.
The announcement comes after months of negotiations between Intel and German officials, as the American giant demanded further support from Berlin, blaming inflation.
The project is now valued at 30 billion euros, up from 17 billion euros last year due to scaling up and rising costs.
Mr Gelsinger said: “We are grateful to the German federal government, Chancellor Olaf Scholz and the government of Saxony-Anhalt for their partnership.”
Mr. Scholz expressed his hope that Germany will become “one of the world's largest semiconductor manufacturing centers.”
The German government is expected to provide Intel €10 billion in subsidies, up from the previously agreed €6.8 billion.
The handouts caused controversy in Germany and caused a split in the government. The newspaper Süddeutsche Zeitung criticized the “unbelievable amount of subsidies” including “one million euros” allocated for each new job.
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TSMC, the Taiwanese semiconductor giant, was also considering building a European plant worth billions of pounds as part of its expansion plans.
Germany already has a significant semiconductor industry of its own, with domestic companies such as Infineon and engineers with key technology skills. The chip industry is also dependent on its huge domestic automotive sector.
Ron Black, chief executive of semiconductor company Codasip, said: “The EU is a natural destination for Intel because they have rich government grants, lots of resources for factories , an experienced workforce and natural customers.”
Mark Dickinson, chief executive of British startup Intrinsic, which was spun off from University College London, said the UK's semiconductor strategy now appeared “grossly underfunded compared to other countries” .
“Intel's recent announcements of investment in manufacturing in the European Union, made against the backdrop of the EU's own significant investment in the Chip Law, demonstrate how seriously the US and EU are moving away from semiconductor manufacturing,” he said.< /p>
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