A factory in Poland, one in Magdeburg, Germany – the financing of which is apparently being finalized – and now Israel: US chip manufacturer Intel is planning another new chip factory there for $25 billion, Prime Minister Netanyahu announced.
In addition to Europe, the US chip manufacturer Intel also wants to position itself more broadly in Israel. According to Prime Minister Benjamin Netanyahu, a new $25 billion factory is planned in Kiryat Gat. This is the largest international investment in the country to date, Netanyahu said.
The plant is scheduled to open in 2027 and will provide employment for thousands of employees, according to the Israeli Ministry of Finance. A tax rate of 7.5 percent was agreed for Intel, which is above the current level of five percent.
The Israeli operations played a “crucial role” in the company’s success, as Intel announced. “Our intention to expand production capacity in Israel stems from our commitment to meet future production needs,” it said. “We appreciate the continued support of the Israeli government.” Intel has been active in the country for almost five decades. The company sees itself as Israel’s largest private employer and exporter.
subsidy negotiations with Germany
Meanwhile, negotiations between Intel and the German government about the construction of a new chip factory in Magdeburg are still ongoing. The final details are to be negotiated over the weekend before Intel boss Pat Gelsinger is to sign the paper, according to media reports, during his planned visit to the Federal Chancellery on Monday.
It is still unclear whether and under what conditions the subsidy volume will be increased. Originally, 6.8 billion euros had been promised. However, Intel had demanded more, which Finance Minister Christian Lindner initially rejected.
In the meantime, however, an increase in the funding amount to around ten billion euros is under discussion, as reported by the “Handelsblatt”, among others. The Magdeburg plant was originally supposed to cost 17 billion euros, but now there is talk of 20 billion euros due to increased construction costs.
Size investment plans – despite billion losses
Last Friday, the manufacturer also announced that it wanted to build a large chip factory in Wroclaw, Poland. In addition to production in Ireland and the planned plant in Magdeburg, it would be the US group’s third European location.
As with almost all new chip factories worldwide, the decision to locate in Wrocław was linked to a government subsidy commitment.
At the same time, the US chip manufacturer has high losses: in the past quarter, there was a drop in sales of a good third (36 percent) and a net loss of 2.8 billion US dollars (2.54 billion euros).
Subsidies as a lure
The background to Intel’s broader positioning in Europe is, among other things, the EU’s goal of becoming more technologically independent of China. The EU Council, together with the European Parliament, passed the so-called “chip law” in April of this year. Accordingly, the European market share of semiconductors is to be doubled from ten percent to at least 20 percent by 2030.
In order for international chip manufacturers to settle with large plants in Europe, the EU recently approved subsidies worth billions.