Germany pushes back against Intel’s demand for more subsidies

The German authorities are willing to top up subsidies for Intel’s fab in Magdeburg on the condition that the chipmaker increases investment too, insiders told the Financial Times. “It’s logical that if the scale of the investment is increased, then the level of subsidy will also rise,” the Economy Minister of Saxony-Anhalt said. Magdeburg is that state’s capital.

Construction of the leading-edge chip manufacturing facility – Europe’s first in decades – was announced in March 2022 at an initial estimated investment of 17 billion euros. The German government agreed to cover 40 percent or 6.8 billion euros. Citing increased construction materials and energy costs, however, Intel is asking for more financial support. The project has been put on hold until a new agreement is reached.

Intel is in a tough spot right now, having fallen behind technologically and facing a tough uphill struggle to catch up with rivals TSMC and Samsung. The company’s ‘Western’ roots work in its favor though, as both the US and Europe have launched Chips Acts to boost domestic semiconductor manufacturing.