Berlin reached an agreement to provide subsidies to the US chip giant Intel on Monday June 19, nearly one-third of its total cost. Amounting to 30-billion-euro ($32.7-billion), the plant will be covered by the German government, a decision which follows a contentious months-long dispute, and sparked controversy.
Berlin agreed Monday to grant US chip giant Intel subsidies totaling almost a third of the cost of a 30-billion-euro ($32.7-billion) German plant in a controversial decision following a months-long row.
The EU is seeking to boost production of semiconductors, used in everything from fighter jets to smartphones, and reduce reliance on Asia after pandemic-induced shortages hit some industries, and Russia’s war on Ukraine brought home the risks of over-dependency.
Construction work on the Intel project was due to begin in the first half of this year but it stalled after the Ukraine war sent inflation soaring.
German officials and the company were then locked in talks for months, but both sides finally signed a deal Monday, which included the increased subsidies.
The project, now projected to cost a total of 30 billion euros, had originally been expected to cost 17 billion, the government sources said.
Chancellor Olaf Scholz, at a signing ceremony with Intel CEO Pat Gelsinger, hailed the agreement as “the single largest foreign direct investment in German history”.
Gelsinger said the project would help forge a “balanced and resilient supply chain for Europe”.
The project will involve two semiconductor manufacturing sites, with the first to enter production in four to five years.
It is expected to create 3,000 permanent high-tech jobs at Intel, and tens of thousands of additional jobs across the industry ecosystem, the company said.
Under the new agreement, Intel will deploy more advanced technology at the sites than originally planned.
Asked earlier this year about delays to the project, Intel had cited growing geopolitical challenges, declining semiconductor demand and rising costs, from construction materials to energy.
Khalil Wakim, with AFP
