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Intel Invests $33 Billion In A Historic Expansion In Germany

Intel Invests $33 Billion In A Historic Expansion In Germany
As part of its push for expansion in Europe, Intel will invest more than 30 billion euros ($33 billion) in the development of two chip-making facilities in Magdeburg. Chancellor Olaf Scholz welcomed the agreement on Monday as the largest foreign investment Germany has ever received.
According to a person familiar with the situation, Berlin has decided to provide subsidies worth up to 10 billion euros to the American chipmaker, above the 6.8 billion euros it had previously given Intel to erect two cutting-edge facilities in the eastern metropolis.
The government and the state of Saxony-Anhalt, where Magdeburg is located, were thanked by Intel CEO Pat Gelsinger for "fulfilling the vision of a vibrant, sustainable, leading-edge semiconductor industry in Germany and the EU."
In order to regain its position as the industry leader in chip manufacturing and more effectively compete with AMD, Nvidia, and Samsung, Intel has invested billions in the construction of plants on three continents.
"Today's agreement is an important step for Germany as a high-tech production location – and for our resilience," Scholz said after Monday's signing.
"With this investment, we are catching up technologically with the world's best and expanding our own capacities for the ecosystem development and production of microchips."
It's Intel's third significant investment in as many days with the German deal. While Israel announced on Sunday that Intel would invest $25 billion in a manufacturing there, Poland, another member of the European Union, received plans for a $4.6 billion chip plant on Friday.
According to McKinsey, the global semiconductor manufacturing market is predicted to grow from $600 billion in 2021 to a trillion-dollar sector by 2030.
Through a combination of governmental subsidies and advantageous legislation, both the United States and Europe are attempting to entice major industrial players, with Germany anxious about losing its appeal as an investment destination.
Berlin's government is spending billions of euros on incentives to entice tech firms, despite rising concern over the supply chain's fragility and its reliance on South Korea and Taiwan for semiconductors.
"The size of Intel's reaffirmed and increased commitment to its expansion in Magdeburg speaks louder than words about Germany's appeal as a high-tech business location," said Robert Hermann, CEO of government agency Germany Trade & Invest.
Berlin has already persuaded Tesla to locate its first European gigafactory there and is in discussions with Taiwan's TSMC and Sweden's Northvolt about ramping up operations in Germany.
The agreement reached on Monday includes, according to Intel, greater government incentives and support, reflecting the project's expanded scope since it was first announced in March 2022.
Amount roughly quadrupled to more than 30 billion euros from Intel's original proposal to invest 17 billion in the Magdeburg plant.
"This shows: Germany is a highly attractive location. We play at the forefront of global competition and secure sustainable and qualified jobs and value creation," Economy Minister Robert Habeck said.
According to Intel, the first plant in Magdeburg is anticipated to open 4–5 years following the European Commission's approval of the funding package.
The first expansion will result in the creation of about 7,000 construction jobs, 3,000 high-tech jobs at Intel, and tens of thousands more employment throughout industry, according to the American chipmaker.
In order to take advantage of the more lenient finance requirements and subsidies offered by the European Commission, Intel announced intentions to develop a sizable chip complex in Germany as well as facilities in Ireland and France last year. The EU is attempting to lessen its reliance on American and Asian chip suppliers.
The difference between what Germany had provided in subsidies and what Intel needed was too great, but Gelsinger told Reuters on Friday that he still intended to achieve an agreement and added that his demand was to be cost-competitive.
"We lost this industry to Asia, we have to be competitive if we're going to bring it back," he said.

Christopher J. Mitchell

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