Tuesday, June 20, 2023

With $11 Billion In Subsidies, Intel To Build $33 Billion Plant In Germany (INTC)

The deal includes "price caps on energy"

From The South China Morning Post, June 20:

  • Intel sealed the agreement for a plant in Magdeburg on Monday at an event attended by CEO Pat Gelsinger and German Chancellor Olaf Scholz
  • Intel bought the land in late 2022 and initially agreed to build the facility with €6.8 billion in aid but postponed construction amid economic headwinds.

Germany and Intel Corp sealed an agreement for the US company to receive an enlarged subsidy package worth about €10 billion (US$10.9 billion) for a semiconductor facility in the former communist east, according to people familiar with the deal.

Intel confirmed the accord Monday without providing a specific amount for the financial aid. It said it plans to invest around €30 billion in the “leading-edge wafer fabrication site” in Magdeburg, which Chancellor Olaf Scholz said represents “the single largest foreign direct investment in German history”.

Together with Intel’s facilities in Ireland and Poland, the new site – which will consist of two fabs and be called “Silicon Junction” – will create an end-to-end semiconductor manufacturing infrastructure, supporting the European Union’s push for a more resilient supply chain, Intel said in a statement.

The first facility is expected to enter production in four to five years following European Commission approval, it added.

“Today’s agreement is an important step for Germany as a hi-tech production location – and for our resilience,” said Scholz, who attended a signing ceremony for the deal at the chancellery in Berlin together with Intel chief executive officer Pat Gelsinger.

The agreement was inked by Scholz’s top economic adviser, Joerg Kukies, and Keyvan Esfarjani, Intel’s executive vice-president, chief global operations officer and general manager of manufacturing, supply chain and operations.

Intel bought the land for the project in late 2022 and initially agreed to build the facility with €6.8 billion in government aid but postponed the start of construction due to economic headwinds.


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