[News] German Plans New Chip Subsidies Estimated at €2 Billion Amid Intel’s Magdeburg Project Delay

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According to a report from Liberty Times, citing Bloomberg, in the wake of Intel’s postponement of its fab construction project in Magdeburg, Germany, the German government is preparing new investments in the semiconductor industry, with insiders estimating the funding to be around €2 billion (≈ USD 2.1 billion).

The report notes that governments around the world have been injecting public funds into the chip industry to promote localized semiconductor production. Earlier this month, Germany’s Ministry of Economic Affairs called on chip companies to apply for new subsidies, though the final figures remain in flux.

Germany is set to hold elections in February, 2025, and the new government could lead to budget reallocations, introducing uncertainty for chip companies currently applying for the subsidies, as highlighted by the report.

Annika Einhorn, a spokesperson for Germany’s Ministry of Economic Affairs, stated that new funds will be allocated to chip companies to advance manufacturing capabilities to cutting-edge technological levels. According to the report, insiders revealed that the subsidies might range between €1 billion and €3 billion.

The report highlights that disruptions in chip supplies caused by the pandemic, along with rising tensions among the U.S., China, and Taiwan, have prompted countries to prioritize strengthening their domestic semiconductor production.

The European Chips Act, passed in 2023, seeks to enhance the EU’s semiconductor ecosystem, aiming to double its market share to 20% of global production capacity by 2030, as the report points out.

However, the report notes that Germany’s chip industry is currently facing setbacks. Intel’s €30 billion (≈ USD 32 billion) Magdeburg factory, initially expected to be the largest project supported under the European Chips Act with up to €10 billion (≈ USD 10.6 billion) in subsidies, has been delayed since September due to Intel’s internal challenges.

Additionally, Wolfspeed and ZF Friedrichshafen AG also withdrew their plans for a chip joint venture in western Germany, as the report indicates.

According to the report, the first round of subsidies under the European Chips Act in Germany was allocated to Intel and a joint venture between Infineon and TSMC in Dresden.

The report notes that the Ministry of Economic Affairs aims to use the newly proposed funds to support 10 to 15 projects across various areas, ranging from wafer production to microchip assembly. Einhorn emphasized that the funded projects should contribute to building a robust and sustainable microelectronics ecosystem in Germany and Europe.

Read more

• [News] Intel Delays German Magdeburg Fab Construction Plans to 2029-30, Sparking Subsidy Return Debate
• [News] TSMC Breaks Ground on German Plant, Looking to Establish a Semiconductor Hub in Europe

(Photo credit: Intel)