Intel Now Seeks $10 Billion State Aid For German Factory – Report

Chip giant Intel reportedly increases the funding requirement from German government for planned Magdeburg chip factory

Intel has reportedly increased the amount of state aid it is seeking from the German government, in order to build a chip factory in one of its cities.

In March 2022, Intel had confirmed the worst kept secret in the tech industry, with the news it would build a chip factory in Germany.

Intel opted for the east German city of Magdeburg as the location of its new multibillion-euro European chip factory.

State Aid

At the time Intel in its announcement said it would invest an initial 17 billion euros into a leading-edge semiconductor fab mega-site in Magdeburg, and would also create a new R&D and design hub in France.

In addition to all this, Intel will invest in R&D, manufacturing and foundry services in Ireland, Italy, Poland and Spain.

This was the first phase of Intel’s plan to invest as much as 80 billion euros in the European Union over the next decade.

In September 2021 CEO Pat Gelsinger said Intel could potentially invest as much as 80 billion euros ($95bn or £69bn) to expand chip production in Europe.

It came after the European Union in March 2021, under its 2030 Digital Compass plan announced it wanted to produce at least 20 percent of the world’s cutting-edge semiconductors by the end of the decade.

To help achieve this goal, the European Commission in February 2022 officially proposed easing state aid rulings to help countries offer financial incentives for the building of chip factories.

The proposal, known as the ‘European Chips Act’, was touted as a way to bolster Europe’s self sufficiency in the semiconductor sector, by easing state aid rules, improving tools to anticipate shortages and crisis, and strengthen research capacity in the bloc.

Intel for its part has not been exactly shy in enticing European officials to pledge monies to subsidise building the chip factory.

Indeed, Pat Gelsinger in March 2021 stated Intel was seeking 8 billion euros (£7bn) in public subsidies for its planned semiconductor plant in Europe.

More money needed

Now Reuters noted, citing a report in the German business daily Handelsblatt on Wednesday, that Intel now wants more state aid from the German government to build its proposed Magdeburg plant.

According to the report that cites government sources, Intel has provided the German economy ministry with a new calculation for the planned Magdeburg factory that considers almost 10 billion euros ($10.74 billion) of government funding is required.

An Intel spokesperson reportedly declined to comment on the figure in Handelsblatt, but was quoted as saying the group was “working very closely with government partners to close the critical cost gap.”

According to the Handelsblatt report, Intel explains that its new demand, which exceeds the already approved funds of 6.8 billion euros ($7.3 billion), was necessary due to higher energy costs and that it would like to use a more advanced technology in the plant than initially planned.