Chip manufacturer Intel stands firm in Magdeburg

Dhe chip manufacturer intel wants to go through with the construction of the mega factory in Magdeburg as planned and rejects speculation about delays. “The project is progressing,” CEO Pat Gelsinger told reporters on Tuesday at the World Economic Forum in Davos. Board member Keyvan Esfarjani, who is responsible for building new factories around the world, also confirmed that there were no fundamental delays: “Yes, we have a few issues, but we are also building a mega factory. Overall, we are on schedule.”

Sven Astheimer

Responsible editor for corporate reporting.

In January, a report circulated that the 17 billion euro project was being delayed or even restricted due to a lack of funding commitments. The federal government alone contributes almost 7 billion euros in subsidies. Intel had decided to do this just outside the gates last spring Magdeburgs to invest in a new mega-factory to produce the latest generation of semiconductors from 2027 onwards. The project is the largest single investment in Germany and will bring enormous growth to the region.

The production complex, which starts with two factories and can be expanded to up to ten plants if necessary, also requires significant investments in infrastructure and supplier companies. Recently, however, some questions had not only arisen with regard to the funding. After Russia’s attack on the Ukraine, energy costs in Europe and especially in Germany have skyrocketed and are causing locational disadvantages. In addition, the US government has increased its subsidies for future technologies.

“We need to rebalance the supply chains”

A lot is also happening on the sales side. Because one of the most important customers in Europe is the automotive industry. This is currently in the transition to electromobility, which tends to increase the need for chips. However, there is a risk that new competitors from Asia or Tesla from America will take market shares from domestic manufacturers, and that there will therefore be less demand for semiconductors.

Intel boss Gelsinger contradicted the impression that he wanted to play Americans and Europeans off against each other in the struggle for higher subsidies. “It’s not a question of Europe or the USA,” he said. Both funding programs (chips acts) are about strengthening competition with the currently dominant chip manufacturers from Asia. Today, 80 percent of suppliers come from Asia, said Gelsinger. 30 years ago, the relationship was reversed. The supply chain problems during the pandemic have shown how dangerous this dependency is. “We have to rebalance the supply chains, that’s what it’s about,” said Gelsinger. The goal is that half of the added value comes back from Europe and the USA. Gelsinger doesn’t see it as a problem that manufacturers from Asia, such as the world market leader TSMC, are striving to set up factories in the West at the same time. “They will benefit from funding programs, but so will we.”

Factory boss Esfarjani added that it is not about short-term advantages for a location, but about the long-term strategy for Europe, where, in addition to Magdeburg, other major investments are being made, for example in the expansion of the plant in Ireland.

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