Shulou(Shulou.com)11/24 Report--

On March 8, Intel wants the German government to invest another $5 billion (currently about 34.7 billion yuan) in building a chip manufacturing plant in eastern Germany, according to people familiar with the matter.

It is reported that Intel has reached an agreement with the German government to build a chip manufacturing plant in Magdeburg, thus receiving a total of $7.2 billion in government subsidies. But the subsidy has yet to be approved by the European Commission. Intel delayed the launch of the project at the end of last year because of the poor global economic situation and is now seeking more investment from the German government.

"the global economic situation has led to rising costs from building materials to energy," Intel, based in Santa Clara, California, said in a statement. "We are grateful for the constructive dialogue with the German government to address the gap in construction costs and make the project globally competitive."

Led by Pat Gelsinger, chief executive, Intel has begun a massive expansion of capacity in an effort to regain its leadership in the semiconductor industry.

Last year, the European Commission announced the EU Chip Act, which plans to invest 43 billion euros into the European semiconductor industry. The United States has also drawn up a $50 billion plan to subsidize domestic chip manufacturing. But Intel's project in Germany is facing delays.

Intel has been competing for government subsidies with competitors such as TSMC and Samsung Electronics, so it is crucial for the company to approve the project as soon as possible. Last year, Intel announced plans to expand its local business in Europe, totaling 33 billion euros, including the opening of a research center in France and the expansion of the company's existing chip plant in Ireland.

The main plan is to build a new chip production base in Europe. Magdeburg, Germany, has become the site of Intel's new factory with local subsidies higher than other European sites. However, energy prices in Europe have fluctuated greatly in the past year, and the resulting inflation has led to a surge in construction costs.

Germany's economy ministry declined to comment on its negotiations with Intel, but pointed out that the EU aims to produce 20 per cent of the world's chips by 2030.

"with this goal in mind, the German government is prepared to invest billions of euros to support Germany's semiconductor industry and build new factories," the German economy Ministry said. " The German economy Ministry also said that any new investment would need to be approved by the European Commission.

Intel initially estimated that the German project would cost 17 billion euros, but now it is expected to cost 30 billion euros, according to people familiar with the matter. Like most projects that will be funded by the government through the eu chip bill, Intel expects the Magdeburg project to receive about 40% of the subsidy, according to people familiar with the matter. They say that while Intel is trying to win direct investment from local governments, it is also willing to accept other government assistance, including tax breaks or energy subsidies.

At the same time, Intel's business expansion in Ireland and France is still largely on schedule, according to people familiar with the matter.

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