Germany would give a subsidy to Intel for 10,000 million euros

Today 15:18

Germany and Intel Corp. closed an agreement for the US company to receive an expanded subsidy package worth about €10 billion ($10.9 billion) for a semiconductor plant in the former communist east, according to people familiar with the deal.

Intel awarded the agreement Monday without providing a specific amount for financial assistance. He said he plans to invest around €30 billion in the “state of the art wafer manufacturing center” in Magdeburg, which according to Chancellor Olaf Scholz represents “the largest foreign direct investment in the history of Germany”.

Together with Intel’s facilities in Ireland and Poland, the new site, which will consist of two floors and will be called “Silicon Union” create an end-to-end semiconductor manufacturing infrastructure, supporting the European Union’s push for a more resilient supply chain, the company said in a statement.

The first facility is expected to go into production in four to five years after approval by the European Commissionadded.

“Today’s agreement is an important step for Germany as a high-tech production site and for our recovery,” said Scholz, who attended the agreement signing ceremony at the chancellery in Berlin along with Intel CEO Pat Gelsinger.

The agreement was signed by Scholz’s chief economic adviser, Joerg Kukies, and Keyvan Esfarjani, executive vice president, global operations director and general manager of manufacturing, supply chain and Intel operations.

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Intel bought the land for the project in late 2022 and soon managed to build the facility with €6.8 billion in government aid, but postponed the start of construction due to financial difficulties.

The benefits of the agreement

The improved package agreed now complied with both traditional aid in the form of financial subsidies as price caps for energy, according to the people cited.

Intel said the site is expected to generate 7,000 jobs during the initial construction phase, as well as some 3,000 permanent jobs andn high-tech and tens of thousands of additional positions “throughout the industry ecosystem.”

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Under Gelsinger’s tenure, Intel has embarked on a massive expansion program aimed at regaining its former dominance of the industry and diversifying manufacturing centers for critical components, currently concentrated in East Asia.

Magdeburg was a key for those planes after outperforming other sites in Europe, but the project foundered after energy prices soared along with construction and material costs.