Intel (INTC.O) will invest more than 30 billion euros ($33 billion) in the development of two chip-making plants in Magdeburg as part of its European expansion push, Chancellor Olaf Scholz said on Monday.
Intel 30B Investment
According to a person familiar with the matter, Berlin has agreed to subsidies worth nearly 10 billion euros with the US chipmaker, which is more than the 6.8 billion euros it initially offered Intel to build two cutting-edge facilities in the eastern city.
Intel CEO Pat Gelsinger expressed gratitude to the government and the state of Saxony-Anhalt, which includes Magdeburg, for “fulfilling the vision of a vibrant, sustainable, leading-edge semiconductor industry in Germany and the EU.”
Under Gelsinger’s leadership, Intel has invested billions of dollars in building factories on three continents in order to reclaim its chipmaking dominance and compete more effectively with rivals AMD (AMD.O), Nvidia (NVDA.O), and Samsung (005930.KS).
“Today’s agreement is an important step for Germany as a high-tech production location – and for our resilience,” Scholz said after the agreement was signed on Monday.
“With this investment, we are catching up with the best in the world in terms of technology and expanding our own capacities for ecosystem development and microchip production.”
The German transaction is Intel’s third large investment in four days. It announced plans for a $4.6 billion chip plant in Poland, another European Union member, on Friday, while Israel announced on Sunday that Intel would invest $25 billion in a factory there.
According to McKinsey, global semiconductor manufacturing is expected to reach a trillion-dollar industry by 2030, up from $600 billion in 2021.
Both the United States and Europe are attempting to entice large industrial players through a combination of state subsidies and favorable legislation, with Germany concerned about losing its attractiveness as a place to invest.
The Berlin government is investing billions of euros in subsidies to entice tech companies, despite growing concern about supply chain fragility and reliance on South Korea and Taiwan for chips.
DESIRABLE LOCATION
“The size of Intel’s reaffirmed and increased commitment to its expansion in Magdeburg speaks louder than words about Germany’s appeal as a high-tech business location,” said Robert Hermann, CEO of Germany Trade & Invest.
Berlin is also in talks with Taiwan’s TSMC (2330.TW) and Sweden’s Northvolt about setting up production in Germany, after convincing Tesla (TSLA.O) to build its first European gigafactory there. At 1534 GMT, Intel’s Frankfurt-listed shares were up 0.3%.
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