Affected by soaring costs, Intel postponed the start of German factories

Recently, it was reported that Intel had postponed the plan to build a new semiconductor factory in the eastern German city of Magdeburg in the first half of 2023. It is reported that the delay of the plan is mainly due to the rising prices of energy and raw materials.

In February this year, the EU promulgated the Chip Act. It was mentioned that Europe would provide 43 billion euros of financial support to attract more semiconductor manufacturers to build factories and develop semiconductor manufacturing business in Europe, in order to avoid long-term and cross-regional supply chain risks. With the support of the Chip Act and other relevant policies, Intel announced on March 15 this year that it would invest 17 billion euros in the eastern German city of Magdeburg to build the company's large chip manufacturing plant in Europe. It is understood that the factory was originally planned to produce chips with a process of less than 2 nm, which can make up for the deficiencies in the advanced process manufacturing of European semiconductors to a certain extent. At that time, the German Federal Foreign Trade and Investment Agency said: "This is the largest foreign direct investment in Germany and even in Europe so far".

Affected by soaring costs, Intel postponed the start of German factories

But now, affected by the sharp increase in the price of local energy and raw materials, Intel has a problem of insufficient budget, and its original plan to build factories in Germany has been disrupted. Intel's initial cost budget was 17 billion euros, but now its budget has risen to nearly 20 billion euros, and there is a huge funding gap between the two. Based on this, Intel postponed its plan to build a factory in Germany.

Benjamin Barteder, a spokesman for Intel, said, "The increasing geopolitical challenges and the declining demand for semiconductors mean that we can't give the exact date of commencement."

Intel added that the company was discussing with the government how to fill the "gap" in funds. "In the current situation, there is a funding gap. We are working with government partners to promote the project".

A spokesman for the German Ministry of Economy said that the country planned to support the Intel project "within the framework of national assistance requirements and the standards of the European Chip Act". The federal government supports the EU's common goal of further expanding Europe's share in the global semiconductor market.

Intel spent a lot of money to build a new semiconductor factory in Germany, which is considered to be an important part of its deepening IDM 2.0 strategy, that is, to reverse the loss situation by developing the latest technology.