BERLIN/STOCKHOLM: Intel, the US chipmaker, is set to receive 10 billion euros ($10.91 billion) in subsidies from Germany for its planned factory in Magdeburg, according to a source familiar with the matter. The deal, expected to be worth around 30 billion euros, follows months of negotiations. Intel’s CEO, Pat Gelsinger, has been aggressively investing billions in building factories across three continents to regain the company’s dominance in chipmaking and compete more effectively with rivals such as AMD, Nvidia, and Samsung.
This agreement in Germany marks Intel’s third major investment in just four days, following a $4.6 billion chip plant in Poland and a $25 billion factory in Israel. The planned investment for the Magdeburg plant is approximately 30 billion euros, as confirmed by the source.
The German government has scheduled the signing of the agreement with Intel for 1245 GMT on Monday. Both Chancellor Olaf Scholz and Intel CEO Pat Gelsinger will be present for the ceremony, as stated by the chancellery. Chancellor Scholz has expressed the government’s commitment to developing investment projects that will establish Germany as one of the world’s leading locations for semiconductor production.
Both the United States and Europe are actively competing to attract major industrial players, using a combination of state subsidies and favorable legislation. Berlin, in particular, is concerned about maintaining its appeal as an investment destination. The German government has been investing billions of euros in subsidies to entice technology companies to establish operations in the country, motivated by growing concerns over supply chain fragility and dependence on South Korea and Taiwan for chips.
Furthermore, Germany is currently in talks with Taiwan’s TSMC and Sweden’s electric vehicle battery maker Northvolt about potential production setups in the country. Tesla has already been convinced to build its first European gigafactory in Germany.
Intel’s shares on the Frankfurt stock exchange experienced a slight decrease of 0.7% at 1137 GMT.
The chipmaker had announced plans last year to build a significant chip complex in Germany, in addition to facilities in Ireland and France. These moves are aimed at taking advantage of the European Commission’s relaxed funding rules and subsidies, as the European Union seeks to reduce its dependence on US and Asian supply chains. The specific size of the investment has not been disclosed by Intel.
Gelsinger, in an interview with Reuters on Friday, acknowledged a significant gap between what Germany had offered and what Intel required. However, he expressed optimism in reaching an agreement, emphasizing the need for cost competitiveness. Gelsinger noted that the overall investment for the site would amount to “tens of billions of dollars,” highlighting the importance of being competitive to bring the chip industry back to Europe and reduce its reliance on Asian markets.
