The large, modern chip factory that Intel wants to build in Magdeburg may not come to fruition despite billions in subsidies. The future of Altera is also uncertain.

Will it get there or not? The chip factory that Intel wants to build in Magdeburg has to overcome a new hurdle. CEO Pat Gelsinger wants to reduce investment costs in response to the poor results. The site in Magdeburg could possibly be destroyed. Reuters knows this thanks to anonymous sources at Intel.

Difficult process

The construction of the new factory was difficult from the start. After Germany won the location, the economic winds changed. Construction would be more expensive than planned and Intel wanted more subsidies.

Germany finally came to terms with this. The Germans would invest a total of ten billion dollars. In return, Intel would build a state-of-the-art factory for the latest chips. For example, Germany and Europe would reduce their dependence on microchips manufactured abroad.

Once the financial situation had been clarified, the groundbreaking ceremony had to take place. But the soil is very fertile and German law requires Intel to carefully remove this soil and deposit it elsewhere. Around 80,000 truckloads of soil still stand in the way. The delays increased and the start of construction work was postponed until 2025 at the earliest.

However, Intel has been in a difficult situation in recent months. Poor results and losses forced Gelsinger to lay off 15,000 people. The CEO continues to work on a restructuring plan in which there are no sacred cows. Even the complete separation of the factory division is negotiable.

Altera

According to Reuters, this has not happened yet, although Gelsinger would again consider selling the FPGA division Altera. Intel bought Altera in 2015 for 16.7 billion US dollars. Marvell is on the shortlist of possible buyers.

Things are not looking good for the plant in Germany either. A postponement seems very likely, and an adjustment is at least possible. Investment costs must be reduced, and the need for an expensive factory is low given the falling demand for chips.

Intel’s top management has not yet made any decisions. That would only happen within a few weeks. The probability that a major restructuring will take place is almost 100 percent. What exactly will happen remains unclear.