Status: 04/13/2023 4:33 p.m
According to a media report, Germany is urging the US chip manufacturer Intel to invest more in its planned location in Magdeburg. The group had previously demanded higher subsidies.
The chip group Intel is apparently investing a significantly higher amount in the construction of the planned chip factory in Magdeburg. As the “Financial Times” reports, the federal government is demanding that the US company expand its investment plans by 17 billion euros in exchange for higher subsidies. The planned factory would already be the largest foreign direct investment in Germany since the Second World War.
It had already become known in February that Intel was now demanding 10 billion euros in subsidies for the construction in Magdeburg instead of the promised 6.8 billion euros. An Intel spokesman cited increased costs for energy and logistics as well as higher construction costs, which had risen significantly due to market developments in the past few months, as the reason for the increased need for investment.
Losing year for Intel
The federal government is now apparently demanding a compromise. Both sides would have to “meet in the middle”, quoted the “Financial Times” from informed circles. “It is logical that if the volume of investment increases, the amount of funding will also increase,” said Sven Schulze, Economics Minister of Saxony-Anhalt.
For the US group, however, the demands for higher investments come at a delicate time. Because the shrinking PC business had recently added to Intel. In the past quarter, the chip manufacturer posted a loss of $664 million. And the prospects for the current financial year are also bleak, with analysts again expecting a loss for the first quarter of 2023.
Europe wants to become more independent
At the same time, the “Inflation Reduction Act”, US President Joe Biden’s billion-euro package in favor of climate-friendly technologies, has already led to a subsidy race between the United States and Europe. Companies like Intel therefore have a strong negotiating position when they insist on higher government subsidies.
The subsidies for the US group are supported by the “European Chips Act”, which also provides for billions in subsidies in Europe. Overall, according to the Financial Times, the EU is planning to provide more than 43 billion euros in subsidies. In this way, companies are to be lured into the EU so that the domestic market becomes less dependent on production in China.