Intel invested 30 billion euros to build two fabs in Germany

In prior events, Intel had secured a subsidy nearing 6.8 billion Euros from the German Federal Government to fund a wafer fabrication facility project in Magdeburg. However, with geopolitical shifts and a downturn in semiconductor demand, coupled with inflationary pressures, the cost escalated, inflating the initial fabrication plant budget from 17 billion to 30 billion Euros. Consequently, Intel’s request for an additional subsidy of 4 to 5 billion Euros ignited controversy, resulting in a temporary hold on the project.

Following extensive negotiations, an accord was finally struck between Intel and the German Federal Government. A revised investment letter of intent was signed, declaring plans to invest over 30 billion Euros for the construction of two new wafer fabrication facilities in Magdeburg. The German Federal Government agreed to a subsidy of 10 billion Euros, encompassing incentive measures.

Intel purchased the land for the project in November 2022, and it is anticipated that within four to five years following the European Commission’s approval of the related scheme, the first wafer fabrication facility will be operational. Given the scale and timeline of Intel’s investment, the production equipment within these facilities may surpass initial projections in terms of sophistication, boasting access to the cutting-edge technology of the emi era. This would facilitate the provision of advanced chip manufacturing services for Intel’s portfolio and its contract clients.

“Building the ‘Silicon Junction’ in Magdeburg is a critical part of our strategy for Intel’s growth. Combined with last week’s announcement of our investment in Wrocław, Poland, and the Ireland sites we already operate at scale, this creates a capacity corridor from wafers to complete packaged products that is unrivaled and a major step toward a balanced and resilient supply chain for Europe,” said Intel CEO Pat Gelsinger. “We’re grateful to the German federal government, Chancellor Olaf Scholz and the government of Saxony-Anhalt for their partnership and shared commitment to fulfilling the vision of a vibrant, sustainable, leading-edge semiconductor industry in Germany and the EU.“