Intel is on the Verge of Persuading German Authorities to Increase Chip Factory Subsidies to €10 Billion

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The negotiation between the German government and Intel Corporation over modifications to the original plans to build a factory in Magdeburg has been ongoing for some time. According to a Bloomberg report, citing Handelsblatt, these talks are nearing conclusion. The project’s fate could be decided this weekend, with the possibility of announcing a subsidy allocation of €10 billion by Monday, significantly more than the originally planned €6.8 billion.

The last year’s agreement no longer corresponds to European economic realities as Intel’s construction costs and energy expenses have noticeably increased. The German authorities, in turn, are eager to persuade Intel to expand the scale of the manufacturing complex to be built in Magdeburg, in the east of the country.

Initially, Intel anticipated spending €17 billion on the project implementation, but over time, this estimate grew to €30 billion. The company’s investment principles stipulate that up to 40% of capital expenditures outside the United States should be covered by local government subsidies. There’s a chance that the negotiations between German authorities and Intel management may not end successfully. However, if successful, Intel CEO Patrick Gelsinger is expected to visit Berlin to sign the necessary documents next Monday.

European parliamentarians have passed a set of laws allowing up to €43 billion in subsidies for such projects, but Intel isn’t the only applicant. Taiwan-based company TSMC is also considering building a local factory in Germany, and GlobalFoundries and STMicroelectronics would likely also appreciate subsidies for building a joint venture in France.

Representatives from Germany’s Ministry of Economics confirmed to Reuters that the ministry is holding intense negotiations with Intel and is fully determined to strengthen the country’s position as a microelectronics manufacturing hub. This, according to officials, is crucial in terms of ensuring the country’s technological sovereignty.

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Martin Harris
I'm Martin Harris, a tech writer with extensive experience, contributing to global publications. Trained in Computer Science, I merged my technical know-how with writing, becoming a technology journalist. I've covered diverse topics like AI and consumer electronics, contributing to top tech platforms. I participate in tech events for knowledge updating. Besides writing, I enjoy reading, photography, and aim to clarify technology's complexities to readers.

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