Intel and the German government signed an agreement on June 19th, under which the American company will spend more than 30 billion euros (32.8 billion USD) to build a chip manufacturing site in the city of Magdeburg, after Germany committed to paying one-third of the necessary investment.
Information about the agreement was released during a meeting between German Chancellor Olaf Scholz and Intel CEO Pat Gelsinger in Berlin.
“This investment in Germany represents a significant expansion of Intel’s manufacturing capacity in Europe and is the largest investment ever made by a foreign company in Germany,” said German Economy Minister and Vice Chancellor Robert Habeck in a statement.
Berlin has agreed to subsidize the American chipmaker 9.9 billion euros, more than the 6.8 billion euros it had previously offered Intel to build two flagship production facilities in the eastern German city, Reuters reported.
Under CEO Gelsinger, Intel invested billions of dollars in building factories across three continents to restore its dominant position in chip manufacturing and better compete with rivals AMD, Nvidia (both in the US), and Samsung (South Korea).
"With this investment, we are catching up with the world's best technology and expanding our own capabilities to develop the microchip ecosystem and manufacturing," Scholz said after the agreement was signed.
Intel CEO Pat Gelsinger and Intel's Executive Vice President (the two on the left) traveled to Berlin on June 19 to finalize a deal with Chancellor Olaf Scholz (behind, right) and his team. Photo: DW
The agreement with Germany marks Intel's third major investment in four days. On June 16, the company revealed plans to invest $4.6 billion in a chip manufacturing plant in Poland, another member of the European Union. Just two days later, Israel also announced that Intel would spend $25 billion on a plant there.
Global management consulting firm McKinsey projects that semiconductor manufacturing will become a trillion-dollar industry by 2030, up from $600 billion in 2021.
Both the US and Europe are trying to attract large industrial companies through a combination of government subsidies and incentive policies.
The German government is also spending billions of euros in subsidies to attract technology companies amid growing concerns about the fragility of its supply chain and its dependence on the South Korean and Taiwanese (China) chip industries.
Berlin is also in talks with Taiwanese company TSMC and Swedish electric vehicle battery manufacturer Northvolt about setting up production facilities in Germany, after successfully persuading Tesla to build its first major European factory in the country.
The agreement on June 19th nearly doubled the planned size of the Magdeburg plant. In March 2022, Intel announced it wanted to invest $17 billion in the plant.
The first facility in Magdeburg is expected to become operational four to five years after the European Commission approves the subsidy package. This plant will create around 7,000 jobs, in addition to approximately 3,000 high-tech jobs at Intel and tens of thousands of jobs across the industry, according to the American chipmaker .
Nguyen Tuyet (According to AP, Reuters)
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