Intel is spending $33 billion in Germany in a landmark expansion

  • The move represents the largest foreign investment in Germany in history
  • Intel receives 10 billion euros in support from Germany – Masdar
  • The move highlights Berlin’s efforts to attract foreign investment
  • As a result tens of thousands of jobs will be created – Intel
  • Intel shares rose 0.4% in Frankfurt

The American company Intel said today, Monday, that Intel will invest more than 30 billion euros ($ 33 ​​billion) in Germany as part of its efforts to expand in Europe, which represents the largest investment by Intel. Foreign company in the largest economy in Europe.

A person familiar with the matter said the deal to build two flagship semiconductor facilities in the eastern city of Magdeburg includes 10 billion euros in German subsidies.

Intel CEO Pat Gelsinger expressed his gratitude to the German government and the state of Saxony-Anhalt, where Magdeburg is located, for “fulfilling the vision of a vibrant, sustainable, and leading semiconductor industry in Germany and the European Union.”

Under Gelsinger’s leadership, Intel has invested billions in building factories across three continents to regain its dominance in the chip industry and better compete with rivals AMD (AMD.O), Nvidia (NVDA.O) and Samsung (005930.KS).

The deal in Germany will be Intel’s third major investment in four days. On Friday, it unveiled plans to build a $4.6 billion chip factory in EU member Poland, and Israel said on Sunday that Intel would spend $25 billion on a factory there.

Globally, semiconductor manufacturing is expected to become a trillion-dollar industry by 2030, expanding from $600 billion in 2021, according to McKinsey.

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Both the US and Europe are trying to attract big industrial players with a combination of government subsidies and favorable legislation, with Germany worried about losing its attractiveness as a place to invest.

The government in Berlin is investing billions of euros in subsidies to attract tech companies, amid growing concern about supply chain fragility and reliance on South Korea and Taiwan for chips.

“Today’s agreement is an important step for Germany as a high-tech production site – and for our flexibility,” Chancellor Olaf Scholz said on Monday.

“With this investment, we are technically catching up with the world’s best technologies and expanding our own capabilities for microchip production and ecosystem development.”

Attractive site

Berlin is also talking with Taiwan’s TSMC (2330.TW) and Swedish electric car battery maker Northvolt about starting production in Germany, having already persuaded Tesla (TSLA.O) to build its first European giant factory there.

Frankfurt-listed Intel shares were up 0.4% at 1419 GMT.

Monday’s agreement includes what Intel said is increased government support including incentives, reflecting the expanded scope of the project since it was first announced in March 2022.

Initially, Intel wanted to invest 17 billion euros in the Magdeburg plant, an amount that nearly doubled to more than 30 billion.

“This shows that Germany is a very attractive location. We play at the forefront of global competition, securing sustainable, qualified jobs and value creation,” Economics Minister Robert Habeck said.

Intel said the first facility in Magdeburg is expected to enter operations 4-5 years after the European Commission approves the support package.

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About 7,000 build jobs will be created in the first expansion, the US chipmaker said, in addition to about 3,000 high-tech jobs at Intel and tens of thousands more across the industry.

Intel last year announced plans to build a large chip complex in Germany and facilities in Ireland and France as it seeks to take advantage of easier European Commission funding and support rules. The European Union is trying to reduce its dependence on US and Asian chip supplies.

Gelsinger told Reuters on Friday that the gap between what Germany offered in support and what Intel needed was very large, but he said he expected an agreement, adding that his request was that the cost be competitive.

“We lost this industry to Asia, we have to be competitive if we want to bring it back,” he said.

($1 = 0.9150 euros)

Writing by Christoph Steitz; Editing by Rachel Moore, Jason Neely, Sharon Singleton and Kathryn Evans

Our standards: Thomson Reuters Trust Principles.

Subanta Mukherjee

Thomson Reuters

Supantha leads European technology and communications coverage, with a particular focus on emerging technologies such as artificial intelligence and 5G. He has been working as a journalist for about 18 years. He joined Reuters in 2006 and has covered many areas ranging from the financial sector to technology. He lives in Stockholm, Sweden.

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