Intel plans $33 bn semiconductor plant in Germany

Intel, the U.S. technology company, announced it will be investing over 30 billion euros ($33 billion) in Germany as part of its expansion plans in Europe. This investment is a significant component of German Chancellor Olaf Scholz’s vision to establish a global chip hub.
Intel semiconductor plan in GermanyThe deal involves the construction of two advanced semiconductor facilities and includes 10 billion euros in subsidies from the German government, Reuters news report said.

Pat Gelsinger, CEO of Intel, expressed gratitude to the German government and the local state of Saxony-Anhalt, where one of the plants will be built. He commended them for realizing the vision of a thriving and sustainable semiconductor industry in Germany and the European Union (EU).

Under Pat Gelsinger’s leadership, Intel has been investing heavily in building factories across three continents, aiming to regain its prominence in chip manufacturing and enhance its competitiveness against rivals such as AMD, Nvidia, and Samsung.

The investment in Germany marks Intel’s third major commitment within four days, following the establishment of a $4.6 billion chip plant in Poland and a $25 billion factory in Israel.

Both the United States and Europe are actively enticing major industrial players through a combination of state subsidies and favorable legislation. Berlin is particularly concerned about maintaining its attractiveness as an investment destination.

To address concerns over supply chain fragility and dependence on South Korea and Taiwan for chips, the German government is offering substantial subsidies to attract tech companies to the country.

Additionally, Germany is in discussions with Taiwan’s TSMC and Sweden’s electric vehicle battery manufacturer Northvolt about potential production setups in Germany, having already convinced Tesla to establish its first European gigafactory there.

Last year, Intel unveiled plans to construct a large chip complex in Germany, along with facilities in Ireland and France. These moves are motivated by the European Commission’s relaxed funding regulations and subsidies as the EU aims to reduce its reliance on U.S. and Asian chip supplies. The exact size of Intel’s investment has not been specified yet.

Pat Gelsinger stated in an interview with Reuters on Friday that there was a significant gap between what Germany had offered and what Intel required, but he expressed optimism about reaching an agreement.

He emphasized the importance of cost competitiveness, stating that in order to bring back the industry that was lost to Asia, they need to be competitive. The overall investment for the site is expected to be in the range of tens of billions of dollars.