Following months of negotiations, the German government and Intel have reached an agreement on the amount of subsidies needed to go ahead with the construction of a leading-edge fab in Magdeburg. The deal was sealed during a signing ceremony in Berlin on Monday afternoon, attended by both Chancellor Olaf Scholtz and CEO Pat Gelsinger.
Intel put construction of the facility, announced in March 2022, on hold in December, seeking additional subsidies to cover increased costs of construction materials and energy. The company now expects to invest more than 30 billion euro in the German site, up from an original estimate of 17 billion euros. Further details of the deal haven’t been made public, but, according to Bloomberg, the state aid was raised from 6.8 billion euro to 10 billion euros, along with price caps on energy.
“Today’s agreement is an important step for Germany as a high-tech production location – and for our resilience. Intel’s semiconductor production in Magdeburg is the single largest foreign direct investment in German history. With this investment, we’re catching up technologically with the world’s best and expanding our own capacities for the ecosystem development and production of microchips,” said Scholz.
In addition to the German chip plant, Intel announced a 4.6-billion-dollar packaging plant near Wrocław, Poland. Not yet official is a 25-billion-dollar expansion of manufacturing operations in Israel, which was announced by Prime Minister Benjamin Netanyahu on social media on Sunday.