Intel and Germany sign deal for $32.8 billion chip plant investment

Berlin — Intel and the German government signed an agreement on Monday under which the US company will invest more than 30 billion euros ($32.8 billion) in a chip manufacturing site in the German city of Magdeburg, with financial backing from Berlin.

Word of the agreement came as German Chancellor Olaf Scholz met with Intel CEO Pat Gelsinger in the German capital.

Intel acquired land for two semiconductor facilities in Magdeburg in eastern Germany in November, and the company says the first of them is expected to start production in four or five years.

“The investment in Germany means a significant expansion of Intel’s production capacity in Europe and is the largest ever by a foreign company in Germany,” Economy Minister Robert Habeck, who is also the country’s vice chancellor, said in a statement. investment.”

Prior to the signing of the revised letter of intent on Monday, the plans were expected to total investment of at least 17 billion euros.

Habach’s ministry said the government intended to support the project financially, a plan that would require approval by the EU’s executive branch.

Neither it nor Intel provided details of the incentives. German news agency DPA, which did not name the sources, reported that the government planned to provide 9.9 billion euros.

The “Silicon Junction” project in Magdeburg combines Intel’s plans for an assembly and test facility near Wroclaw, Poland, and an existing chip factory in Ireland.

In a speech to Germany’s main industry lobby group on Monday, Scholz highlighted efforts to encourage chip production in Europe, reducing his country’s dependence on imported chips and global supply chains.

If all the investment plans currently being considered are implemented, “and we are working on it including today, Germany will become one of the large global semiconductor production sites,” he said.