Intel is demanding additional subsidies from Germany for the construction of its chip factory

Last month, reports surfaced that Intel had received nearly 6.8 billion euros in subsidies from the German federal government for its wafer fab project in Magdeburg. However, due to geopolitical changes and a decline in demand for semiconductors in the market, along with inflationary factors, the cost is expected to increase. As a result, Intel is asking for an additional 3.2 billion euros in subsidies, hoping to receive a total of 10 billion euros.

According to Bloomberg, although Intel had previously requested more subsidies, the 3.2 billion euros requested does not seem to be enough, and the company has now raised its request to between 4 and 5 billion euros. This move was prompted by a combination of factors, including the previously mentioned issues, as well as rising interest rates and energy prices, which have contributed to increased costs. Reports suggest that the cost of the wafer fab has increased from an initial estimate of 17 billion euros to 30 billion euros, a significant increase.

In a statement provided to the media, Intel wrote: “Disruptions in the global economy have resulted in increased costs, from construction materials to energy. We appreciate the constructive dialogue with the federal government to address the cost gap that exists with building in other locations and make this project globally competitive.”

The German Ministry of Economics declined to comment on its discussions with Intel but stated that the EU’s goal is to occupy 20% of the world’s semiconductor production capacity by 2030. To this end, the German federal government has prepared billions of euros in support of the semiconductor industry’s development, but any additional funding allocation requires the approval of the EU Commission.

Intel has already postponed plans for its wafer fab in Magdeburg, Germany, and its packaging plant in Italy, hoping to receive more financial support from local governments.