Intel agrees to build a new chip factory in Magdeburg. In return for more subsidies, the chip manufacturer will also invest more itself.

After some delays, Germany and Intel have nevertheless agreed to build a modern chip factory in Magdeburg. Intel will build a modern chip factory that will cost 30 billion euros. Germany accounts for ten billion euros of this.

Higher price

At the beginning of February last year, Intel announced construction plans. The factory would cost around 17 billion euros, of which Germany would invest 6.8 billion euros. The economic climate soon changed, partly due to the war in Ukraine, and costs were significantly higher. Intel hit the pause button and wanted more subsidies from Germany.

The cost of building the proposed site had already risen to $20 billion. Intel wanted subsidies from Germany to increase as well, but the Germans definitely didn’t want to release more billions to appease Intel.

More subsidies, larger overall investments

Now Germany is coming over the bridge. Although the finance minister recently made it clear that a higher subsidy amount was out of the question, the country now suddenly has a total of ten billion euros at its disposal. There is a reward. In return for the additional subsidies, the plans will be expanded. The total investment in the German location is now 30 billion US dollars.

The factory would become even more advanced, although it’s not entirely clear what that means. The planned location was already designed to bake the most advanced chips on Intel’s current roadmap. Intel 3, Intel 20A and Intel 18A were already planned. Intel 3 may be skipped now.

Complete production chain

The location in Magdeburg is named silicon compound along. It is part of Intel’s broader investment plan in Europe. Intel yesterday announced a major investment in Poland. Intel wants to set up a factory for packaging microchips there. In combination with Silicon Junction, Intel is building a complete production chain on European territory. This is good news for the EU. After all, the Union is trying, among other things, to produce more chips within Europe through the Chips Act.