Intel applied for an additional € 5 billion subsidy for German chip manufacturing base

Intel is applying for an additional subsidy of 4 billion to 5 billion euros(about 4.2 billion to 5.3 billion dollars)from the German government to promote the plan to build a chip manufacturing base in the eastern part of the country.

Intel has reached an agreement with the local government to build a factory in Magdeburg,and has therefore received a government subsidy of 6.8 billion euros(about 7.2 billion dollars),which is currently awaiting the approval of the European Commission.However,due to the poor economic prospects,the company postponed the commencement plan at the end of last year and is currently seeking more subsidies.

In the regular trading on the NASDAQ market on Tuesday,Intel shares closed at$25.53,down 1.77%from the previous trading day.

Intel said in the statement:”The global economic turmoil has led to an increase in costs in all aspects,from building materials to energy.We appreciate the constructive dialogue with the federal government to resolve the cost differences with other places,making the project globally competitive.”

Under the leadership of CEO Pat Gelsinger,Intel began to build new factories on a large scale in order to regain the leading position in the semiconductor industry and rebalance the global chip production layout.

Last year,the European Commission announced a plan called the EU Chip Act,which will invest 43 billion euros in the semiconductor industry in Europe.The United States also plans to subsidize its semiconductor manufacturing industry by$50 billion.

Intel is competing with TSMC and Samsung Electronics for these government-subsidized projects,so it is crucial to obtain project approval as soon as possible.The company announced its expansion plan in Europe last year with a budget of 33 billion euros,including the establishment of a research center in France and the expansion of the existing chip factory in Ireland.

The chip production base is the most important plan,and Magdeburg finally won the project with various concessions.However,after the outbreak of the Russia-Ukraine conflict,European energy prices fluctuated significantly,and inflation also led to soaring construction costs.

The German Ministry of Economy declined to comment on the dialogue with Intel,but pointed out that Europe’s goal is to produce 20%of the world’s semiconductors by 2030.