US-based tech giant Intel has announced that it will postpone the construction of a major microchip factory in Magdeburg, Germany and also suspend another investment in Poland for two years to offset major losses.
“We will pause our projects in Poland and Germany for approximately two years based on expected market demand,” Intel CEO Patrick P. Gelsinger said in a blog post late on September 16.
The two projects – partly funded through government grants – are key parts of the EU’s efforts to boost the bloc’s semiconductor industry to make it more resilient and independent. The EU Chips Act, which came into effect last September, aims to double Europe’s share of global semiconductor production to 20% by 2030.
Intel is struggling with losses and has initiated a cost-cutting program, including suspending a factory project in Magdeburg, Germany. Photo: Yahoo!News
Intel's €30 billion investment in Magdeburg is the largest project planned under the EU's Chips Act, with a third of the money coming from German government subsidies. The company's €4.2 billion project in Poland has been hailed as "the largest investment in Polish history." Of that, €1.7 billion will come from state aid, according to Polish media.
Those ambitious plans appear to have been hampered by Intel’s financial woes, which are on track for a third straight year of declining sales, with its stock price losing about 56% of its value by 2024, making it the second-worst performing stock on the S&P 500.
In August, Intel reported a loss of $1.6 billion (€1.4 billion) in the second quarter of this year, as well as significant layoffs, “company-wide restructuring and operations” and spending cuts of more than $10 billion by 2025 compared to expectations.
“All eyes have been on Intel since we reported our second-quarter earnings,” Gelsinger wrote. The CEO has been trying to expand the company’s factory network amid falling sales. The U.S. giant eventually considered several options to address the losses, including spinning off its manufacturing division, before deciding to suspend projects in Germany and Poland, Bloomberg reported.
Intel is sticking to its investments in the United States, which is also trying to increase its chipmaking capacity. On September 16, Intel also announced that it had received an additional $3 billion (€2.7 billion) in direct government funding to develop semiconductors for defense and intelligence. This is in addition to the $8.5 billion in direct funding, up to $25 billion in tax breaks, and up to $11 billion in loans that the company had previously agreed with the U.S. Department of Commerce.
Intel’s decision to suspend projects in Europe is a blow to the EU’s efforts to boost competitiveness in key technologies, including semiconductors. The move by the US company also causes trouble for European Commission President Ursula von der Leyen, who on September 17 announced her team for a second term and wants a “stronger industrial strategy.”
Minh Duc (According to Euractiv, Politico EU)
Source: https://www.nguoiduatin.vn/tham-vong-nganh-chip-cua-eu-vap-phai-da-tang-204240918111154854.htm
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