Ten billion euros of state aid
Federal government massively increases Intel subsidies
6/19/2023 1:54 p.m
The chip manufacturer Intel is investing a mid double-digit billion amount in the construction of new plants outside the USA. Almost half of the sum is to flow into a factory in Germany. The federal government is significantly expanding its aid commitments.
According to media reports, the federal government wants to support the settlement of the US chip manufacturer Intel in Saxony-Anhalt with 9.9 billion euros. According to this, Intel is investing more than 30 billion euros, including state aid. However, the increase in state aid still has to be approved by the EU Commission. The semiconductor sector is an industry of the future because chips are needed in more and more areas of life.
In March 2022, Intel announced that chips would be produced in Magdeburg, the state capital of Saxony-Anhalt, from 2027. In a first expansion stage, two semiconductor factories are to be built, which could create several thousand jobs. A high-tech park for the settlement of suppliers is also planned.
IFO President Clemens Fuest considers the billions in subsidies to be “questionable”. There are delivery risks with many products, “that’s part of normal business life,” said the head of the Munich institute. The subsidy of up to ten billion euros is a very high insurance premium. There are also alternatives to domestic production such as diversification of suppliers, warehousing and recycling.
“In addition, it is not clear what exactly is actually produced in Magdeburg, whether it is the chips that Germany or Europe need, and to whom these chips will be delivered in the event of a crisis,” criticized Fuest. The resettlement of such energy-intensive companies does not go well with other measures, such as the capping of energy consumption through the Energy Efficiency Act. “One should at least insist that a considerable amount of research and development be located in Magdeburg.” In this way, subsidies could be justified more easily.
Intel invests 25 billion in Israel
Originally, Intel had given its investment sum for Magdeburg as at least 17 billion euros. However, due to rising construction and energy costs, it is becoming more expensive. In addition, the company wants to rely on even more modern technologies in chip production. All in all, Intel is almost doubling its investments, according to government circles. Finance Minister Christian Lindner had long blocked higher subsidies and referred to empty coffers. The additional money is said to come from a fund of the Ministry of Commerce, according to previous reports.
Federal funding will increase from the initially planned 6.8 billion to 9.9 billion euros. Representatives of the federal government and the company plan to sign an agreement in Berlin shortly. Before that, Chancellor Olaf Scholz wants to meet Intel boss Pat Gelsinger. The federal government and the chip manufacturer had been negotiating intensively on the amount of government support until the very end. Archaeological investigations and preparatory work for the construction are already underway on the site in Magdeburg.
The US chip group is expanding worldwide: In the past few days, Intel had announced the construction of a $25 billion plant in Israel. “This is the largest investment ever made by an international company in Israel,” said Prime Minister Benjamin Netanyahu. Intel also wants to invest around 4.6 billion dollars in Poland: A plant for testing and assembling processors is to be built in Wroclaw.