Intel has signed a deal with the German government to construct a chip manufacturing plant in Magdeburg, Germany, Euronews reports.
The agreement involves Intel, an American multinational semiconductor company investing over €30bn, making it the largest foreign direct investment in the modern history of the country.
German Chancellor Olaf Scholz and Intel CEO Pat Gelsinger met in Berlin to finalize the agreement, which includes the German government pledging to cover one-third of the total investment required.
Intel acquired the land for two semiconductor facilities in Magdeburg in November and expects the first plant to commence production within the next four to five years.
"The investment in Germany means a significant expansion of Intel's production capacity in Europe and is the biggest investment ever made by a foreign company in Germany," Vice Chancellor and Economy Minister Robert Habeck stated in a press release.
Before the revised letter of intent was signed on June 19, plans had foreseen a total investment of at least €17bn. The German government confirmed that it will now provide €9.9bn raising its contribution to one-third of the total investment.
The plan will need approval by the European Union's executive branch to ensure the deal doesn't give Intel an unfair advantage over its competitors.
The “Silicon Junction” project in Magdeburg adds to Intel's plans for an assembly and test facility near Wroclaw, Poland, and an existing chip factory in Ireland.
The construction of the two semiconductor plants is anticipated to be completed by 2027. This project is expected to create 3,000 high-quality jobs and generate additional employment opportunities in supplier networks, strengthening the regional economy.
The decision to support Intel's investment has not been without criticism, as some have questioned the substantial amount of public funds being allocated to one of the world's largest corporations. However, Governor Reiner Haseloff of Saxony-Anhalt emphasized the importance of strategic self-sufficiency for Europe.
"We cannot allow strategic technologies to take place and be made in Asia or exclusively in America, but we as Europe must have a certain self-sufficiency and also be able to provide decisive key products ourselves," Governor Reiner Haseloff said.
By attracting major semiconductor investments, Germany aims to position itself as a prominent global hub for chip production. Chancellor Scholz, in a speech to Germany's main industry lobby group, reaffirmed the country's commitment to fostering chip production in Europe and reducing its dependence on imported chips and global supply chains.
“If all investment plans currently being considered are implemented, and we are working on this, including today, Germany will become one of the big global semiconductor production sites,” he said.
The Intel chip plant in Magdeburg, combined with the company's assembly and test facility near Wroclaw, Poland, and its existing chip factory in Ireland, will significantly strengthen Intel's presence in Europe and contribute to the EU's goal of achieving greater autonomy in microchip production.
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