Intel Delays German Factory Project Sparking EU Semiconductor Subsidy Debate

Intel has decided to delay its plans to establish a factory in Germany, delivering a setback to the European Union's semiconductor ambitions. This delay could reignite debates regarding the allocation of a €10 billion subsidy intended for the semiconductor sector.

The Magdeburg project, originally poised to be supported by the EU's ambitious Chip Act, is now postponed by approximately two years. The delay impacts the EU's goal of producing one-fifth of the world's semiconductors by 2030.

Currently, the Magdeburg facility is in the final stages of EU approval and has not yet utilized funds from the German government. This postponement may ease some fiscal pressure for Germany, as the nation faces a projected budget shortfall of at least €12 billion by 2025.

German Finance Minister Christian Lindner emphasized that any funds not required for the Intel project must be retained to address fiscal uncertainties within the federal budget.

German Chancellor Olaf Scholz expressed optimism, stating that earmarked funds for semiconductor projects would continue to aid Germany's development in this field. The subsidies for semiconductors come from a special fund managed by the German economy ministry, distinct from the regular budget.

German Economy Minister Robert Habeck reiterated that delaying the factory was purely a business decision, reaffirming Germany's strategy to encourage semiconductor production within Europe.

In parallel to this decision in Germany, Intel announced a postponement of a new plant in Poland to address declining sales and escalating losses. This move aligns with broader cost-cutting measures, including workforce reductions and suspending dividend payouts.

Over recent years, Intel has struggled with competitiveness, losing its technological edge, resulting in a market value drop to below $90 billion. The company's stock has fallen 58% this year, no longer ranking among the top ten global chip companies.