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Germany refuses to increase subsidies for Intel plant

Update time : 2023-06-13 10:25:17

Intel's upcoming plant near Magdeburg, Germany, is expected to be the largest and most advanced semiconductor manufacturing plant in Europe, but its costs are increasing and Intel recently expressed interest in receiving more subsidies from the country's government. But German authorities are reluctant to provide more money to the company because it is not in their budget, according to the Financial Times.

Intel is located in eastern Germany Magdeburg of the new 17 billion euros factory, originally scheduled to receive government subsidies 6.8 billion euros. But the fab construction was delayed, and due to rising energy prices, material costs and inflation, the cost of the production facility is now expected to be about $31.675 billion (30 billion euros), probably because Intel also decided to install more advanced tools in order to produce chips on more complex production nodes in Germany. In order to bridge this funding gap, Intel cited increased energy and construction costs and asked the government to add more additional subsidies instead. To be precise, Intel is seeking additional subsidies from the German government of $4.223 billion to $5.279 billion (4 billion to 5 billion euros).
However, Lindner opposed the increase in subsidies when interviewed last week. "There's really no way to move more budget ...... We're trying to consolidate, not expand, the budget."
Intel's plan to build a factory is the largest foreign investment case in Germany since the post-war era and is seen as key to the EU's goal of doubling its global semiconductor market share to 20 percent by 2030. Some German officials (including Economy Minister RobertHabeck) believe that Berlin must try to keep up with the Biden administration's "Chips and Science Act" subsidy scale. However, some economists believe that this is a waste of taxpayers' money, worried about reducing the ambition to reduce dependence on Asia is just a pipe dream, because the chip supply chain is very complex.
For Intel's request, the German federal government split into two factions. Chancellor Olaf Scholz, who belongs to the Social Democratic Party, and Habeck of the Green Party are open to the possibility of Intel's expansion of investment to encourage them. Lindner, who belongs to the Liberal Democrats, however, said he was not at all enthusiastic about the subsidies, and that he would oppose pulling up the subsidies even if Intel decided to expand its investments.
It was rumored by the foreign media at the end of May that TSMC was negotiating with the German government in the hope of securing a maximum subsidy of 50% for the construction of factories, with the subsidy ceiling being the same as the level given to TSMC by Japan. In addition, TSMC executives said on May 23, the company is still negotiating the possibility of setting up a factory in Germany, but the soonest until August may be finalized.

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