Intel postpones construction of a plant in Germany until 2030 with a 50% chance of failure

It took the German government some time to find €10 billion to fund Intel Fab 29 near Magdeburg. However, the company is now postponing the project to 2029-2030.

Intel plant in Magdeburg was to receive €10 billion from the state’s Climate and Transformation Fund, with an initial tranche of €3.96 billion allocated for 2024. However, Intel postponed construction for financial reasons and slowly stopped construction. This funding will likely return to the federal budget

The delay jeopardizes Germany’s ambitions in the semiconductor sector and raises a political question about the use of €10 billion in government subsidies. Finance Minister Christian Lindner is in favor of reallocating the funds, seeing it as a fiscally prudent response to current economic pressures. Economy Minister Robert Habeck has resisted the change, as his ministry controls the fund and intends to support economic growth and climate initiatives.

Intel’s delay creates uncertainty about the future of the project, including the fact that it will continue. The question arises as to whether everything will go as planned or whether new conditions will need to be agreed upon. Earlier this year, Alexander Schirsch of the German Institute for Economic Research (DIW) said that given Intel’s current poor financial condition, the chances of it returning to the Magdeburg project are no more than 50%.

If Intel decides to continue, the government may have to create the subsidy terms from scratch. If Intel cancels the project, there will be a question of how to use the land intended for the plant. This could create obstacles for existing regional development plans.

Given the global economic situation, it may become increasingly difficult for Intel and the German government to obtain the necessary financing and continue building the factory in the coming years. Intel is also facing problems in the United States: slow funding for by the CHIPS Act prevents the construction of factories and makes you look for alternative sources investments.

Source: Tom’s Hardware