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Intel said to delay German factory start and seeks more subsidies

Logo, Light, Sign REUTERS/Fabian Bimmer
The US chipmaker has been ramping up investments to make chip factories across the US and Europe

Intel Corp has backed away from its original target of opening a chip factory in the eastern German city of Magdeburg in the first half of 2023, regional newspaper Volksstimme reported, saying the semiconductor giant wanted more public subsidies.

The plant is central to German and European Union plans to strengthen the continent’s resilience by doing more manufacturing locally after the Covid-19 pandemic and Russia’s invasion of Ukraine highlighted the risks of long, globe-spanning supply chains.

But the newspaper said that surging energy and raw materials prices had upset the US company’s original calculations. Where Intel had originally budgeted for costs of €17 billion ($18 billion), prices were now closer to €20 billion, the paper said.

“Geopolitical challenges have grown and demand for semiconductors has fallen,” Intel spokesperson Benjamin Barteder was quoted by the paper as saying. “This means we cannot yet give a definitive date for the start of construction.”

The company added that it was discussing with the government how a funding “gap” could be bridged, the newspaper said.

“The gap emerged in this current situation. We are working with partners in the government to push the project forward,” the newspaper quoted Intel as saying.

Intel did not immediately respond to a request for comment.