Intel revealed more than €30 billion will be invested in its German chip manufacturing facility, with €10 billion of the sum to reportedly come from the government’s pocket after the pair reached an agreement on a support package for the site.
The agreement followed Intel’s “expanded investment” in the facility, the company noted in a statement. The German government previously expressed objections to Intel’s request for higher subsidies and said it was willing to up financial aid if the company raised its own investment.
Bloomberg stated the government will now invest €10 billion in the project, citing an unnamed source.
“Subsidies are an essential part of building semiconductor fabs these days as competitiveness is all about the total cost of ownership where the single biggest swing factor is the amount of state subsidies that are received,” Richard Windsor, founder of research blog Radio Free Mobile noted.
“On a straight dollar-for-dollar basis, the German government is now offering a lower subsidy than it was before, meaning that jobs created and taxes generated will cost less than before on a relative basis.”
The site will be located in Magdeburg and is expected to start production by 2028. It will include two manufacturing sites for Intel’s own products and those tailored to suit customers’ needs.
Intel expects the facility will support tens of thousands of jobs across the industry, on top of 7,000 construction jobs at its initial phase and 3,000 “high-tech” jobs at the company. It will also aim to serve as an innovation hub across the region, promoting the development of the semiconductor ecosystem in Europe.
CEO Pat Gelsinger described the Magdeburg project as “critical” to Intel’s growth.
“Combined with last week’s announcement of our investment in Wrocław, Poland, and the Ireland sites we already operate at scale, this creates a capacity corridor from wafers to complete packaged products that is unrivalled and a major step toward a balanced and resilient supply chain for Europe.”