Intel secures €10bn in German state subsidies to build chip plant

Berlin/Stockholm — Intel will invest more than €30bn in Germany as part of its expansion push in Europe, the US semiconductor maker said on Monday, a project key to German Chancellor Olaf Scholz’s ambitions to create a global chip hub.

The deal, which involves two leading-edge semiconductor facilities, involves €10bn in German subsidies, a person familiar with the matter said.

Intel CEO Pat Gelsinger said he was grateful to the German government and the local state of Saxony-Anhalt, where the company plans to built one plant, for “fulfilling the vision of a vibrant, sustainable, leading-edge semiconductor industry in Germany and the EU”.

Under Gelsinger, Intel has been investing billions in building factories across three continents to restore its dominance in chipmaking and better compete with rivals AMD, Nvidia and Samsung.

The deal in Germany would be Intel’s third big investment in four days, following a $4.6bn chip plant in Poland and a $25bn factory in Israel.

Both the US and Europe are trying to lure big industrial players via a mix of state subsidies and favourable legislation, with Berlin concerned about losing appeal as a place to invest.

The German government is investing billions of euros in subsidies to lure tech companies to Germany amid growing alarm over supply chain fragility and dependence on Taiwan and South Korea for chips. Taiwan produces up to 90% of the world’s most advanced chips.

Berlin is also talking with Taiwan’s TSMC and Sweden’s electric vehicle battery maker Northvolt about setting up production in Germany, having already convinced Tesla to build its first European gigafactory there.

Frankfurt-listed Intel shares were 0.3% lower on Monday.

The chipmaker last year announced plans to build a big chip complex in Germany, along with facilities in Ireland and France, as it seeks to benefit from the European Commission’s eased funding rules and subsidies as the EU tries to cut its dependence on US and Asian supply.

It has not yet specified the exact size of the investment.

Gelsinger said on Friday that the gap between what Germany had offered and what Intel needed was too big but he expected to reach an agreement, adding that his request was to be cost competitive.

“We lost this industry to Asia, we have to be competitive if we’re going to bring it back,” he said, adding the overall investment for the site would be “tens of billions of dollars”.

Reuters