Intel Corp is set to receive almost US$11 billion in subsidies from the German government for a chip manufacturing complex in the eastern part of the country, people familiar with the matter said.
The company postponed the start of construction at the plant — which it had previously agreed to build in Magdeburg with 6.8 billion euros (US$7.5 billion) in government aid — at the end of last year because of economic headwinds and had been asking for more funds, people with knowledge of the situation said.
Germany has now expressed a willingness to grant about 10 billion euros as part of negotiations, people said, asking not to be identified because the information is not public.
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Negotiations on the subsidies are likely to stretch into the weekend and an official announcement might come as early as Monday, one of the people said.
Germany remains in “intensive” negotiations with Intel over the subsidy, a spokeswoman for the economy ministry told a press conference yesterday, declining to comment on the “numbers which are circulating.”
German Chancellor Olaf Scholz is to host Intel CEO Pat Gelsinger in Berlin on Monday, another spokesman for the government said.
“It’s good news that many companies are currently making big investment decisions with regard to the semiconductor industry in Germany,” Scholz said at an earlier event. “If all these plans become reality, a lot will come together here. And with some we are talking in detail.”
Scholz’s government is willing to grant more state subsidies to the US company — but only under the condition that Intel significantly increase its overall investment for the factory, one of the people familiar with the talks said.
The state aid will come through a variety of mechanisms, including price caps, one of the people said.
Handelsblatt reported earlier on Thursday that Intel and the government have agreed to an increase in government aid for the plant.
Intel had originally estimated that the project in Germany would cost 17 billion euros, but now expects to spend 30 billion euros, according to people familiar with the situation.
Like most projects that would receive government funding through the EU’s Chips Act, Intel was expecting about 40 percent of its project to be subsidized, the people said.
Intel announced an expansion across Europe last year that, at the time, was worth 33 billion euros, including a research center in France and an expansion of its chip facility in Ireland.
Those plans are facing delays just as the US is pressuring other nations to help keep China’s chipmaking abilities from advancing. Last year, the European Commission announced a plan, called the EU Chips Act, to pour 43 billion euros into the semiconductor industry on the continent. The US similarly laid out a US$50 billion plan to subsidize its own domestic production.
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