{"id":24610,"date":"2022-12-20T01:18:18","date_gmt":"2022-12-20T01:18:18","guid":{"rendered":"https:\/\/mailinvest.blog\/index.php\/2022\/12\/20\/intel-delays-construction-of-18b-german-chip-fab-as-it-angles-for-more-government-funding\/"},"modified":"2022-12-20T01:18:18","modified_gmt":"2022-12-20T01:18:18","slug":"intel-delays-construction-of-18b-german-chip-fab-as-it-angles-for-more-government-funding","status":"publish","type":"post","link":"https:\/\/mailinvest.blog\/index.php\/2022\/12\/20\/intel-delays-construction-of-18b-german-chip-fab-as-it-angles-for-more-government-funding\/","title":{"rendered":"Intel delays construction of $18B German chip fab as it angles for more government funding"},"content":{"rendered":"

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Intel Corp. is reportedly going to delay construction of a planned new semiconductor fabrication plant in Magdeburg, Germany, that it was set to break ground on early next year.<\/p>\n

The chipmaker is said to be seeking additional government subsidies to help fund construction amid reports of increased costs.\u00a0Intel had originally planned to start construction of the new site sometime in the first half of 2023, according to a report by the German media site Volksstimme.<\/p>\n

The report cited<\/a> Intel spokesperson Benjamin Barteder as saying the new fab was slated to be up and running by 2027, but could now be delayed.\u00a0According to Barteder, much has changed since Intel announced its plan<\/a> to build the Magdeburg fab earlier this year. The rapid rise in inflation has driven up the costs of energy and raw materials considerably, he said. Intel is also said to be concerned that demand for semiconductors is in decline.<\/p>\n

\u201cGeopolitical challenges have become greater, semiconductor demand has declined, and inflation and recession are disrupting the global economy,\u201d Barteder was reported as saying. \u201cThis means we cannot yet give a definitive data for the start of construction.\u201d<\/p>\n

The original cost for building the fab was first estimated at \u20ac17 billion ($18 billion), and Germany\u2019s government was expected to subsidize<\/a> that cost to the tune of \u20ac6.8 billion, covering almost 40% of the total. However, Intel says that inflation means that estimate has now risen to around \u20ac20 billion. As a result, the company is asking the German government to provide additional subsidies.<\/p>\n

Previously, Germany\u2019s government has said it\u2019s willing to provide up to \u20ac14 billion in state aid to encourage chipmakers to build new facilities in the country. It\u2019s not clear how much of that pot has been set aside for other projects.<\/p>\n

What isn\u2019t clear is how far Intel is willing to go to pressure the German government to provide further aid. Clearly though, if Intel were to cancel the project entirely, that would be a big blow for Germany and also the European Union, which, like the U.S., is keen to expand its domestic chipmaking industry.<\/p>\n

Last February, the EU announced the European Chips Act, which aims to ramp up semiconductor design and manufacturing in the region in order to reduce Europeans\u2019 reliance on Asian chipmakers. Intel, with its Magdeburg plant, was set to play a major role in the expansion<\/a>.<\/p>\n

One advantage the EU does have is that pulling out of the project would likely harm Intel\u2019s own innovation agenda, analysts said. \u201cIntel has to focus on its own ambitions and deliver on some of the innovations it has planned, and to do that it will need new factories,\u201d said Holger Mueller of Constellation Research Inc. \u201cSo it\u2019s unlikely that Intel can just sit this one out. When governments want to direct enterprise investments, things can quickly evolve into a negotiation and that\u2019s what seems to be happening with Intel and the German government and EU.\u201d<\/p>\n

Intel is no stranger to stalling tactics. In June, it was reported that the company threatened to delay construction<\/a> of two new fabs in Ohio after the U.S. government failed to approve the so-called CHIPS Act that authorized the necessary subsidies for those projects.<\/p>\n

Photo:\u00a0Thomas Cloer\/Flickr<\/a><\/h5>\n
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