Germany wants to grant Intel 6.8 million euros in subsidies, not a cent more. Will this endanger the construction of the factory?

Intel had asked for more subsidies to start building its upcoming chip factory in the German city of Magdeburg. Because the costs threaten to rise to 20 billion euros, the previously known provided 6.8 billion euros are scarce, the chip manufacturer believed. Intel had hoped to get at least an extra €3.2 billion, but it won’t pan out. The federal government is not prepared to pay additional millions.

The reason is very simple: there is no longer a budget, explains Federal Finance Minister Christian Lindner to the Financial Times. The federal government, too, looks for ways to save money during tough economic times and can’t justify providing additional billions to Intel. The federal government is prepared to stimulate the construction of the factory in other ways, for example by granting cheaper electricity.

Postponement or cancellation?

Whether Intel will like that is another question. The American chip manufacturer had threatened a delay if Germany did not respond to the request for additional subsidies. It now appears that Intel has to fund more out of its own pocket than it can afford.

In addition to Germany, the chip manufacturer has other locations in mind, each of which will also cost several billion. Aside from the vague statement that “a way needs to be found to close the cost gap,” we haven’t heard from Intel’s camp.

Golden middle

The factory in Germany is of great importance for both Intel and Europe. Intel wants to increase and diversify its production capacities in order to once again become the largest chip manufacturer in the world. Europe wants to bring the big players back to its own territory in order to become less dependent on chip production on other continents. These matching interests can increase the willingness to find a happy medium.