Intel's German chip plant deal in jeopardy

Intel may be pulling out of a planned €20 billion semiconductor fabrication plant in Germany after the German government turned down its request for higher subsidies.

German finance minister Christian Lindner told the Financial Times that “there is no more money available in the budget,” adding that “we are trying to consolidate the budget right now, not expand it.”

The fabrication, or fab plant in the German city of in Magdeburg was initially expected to cost €17 billion to complete but the rising cost of energy and materials have now pushed that up to €20 billion.

As a result Intel increased its demand from €6.8 billion in subsidies to €10 billion, according to a report in Electronics Weekly.

Intel already purchased the land where the fab will be built late last year, announcing Magdeburg as the site for its new mega chip manufacturing complex in March last year.

In January Intel chief global operations officer Keyvan Esfarjani insisted that the deal was going ahead, telling Reuters “we are committed to making the Magdeburg project successful.”

However, rising energy costs resulting from the Ukraine war are said to have increased Magdeburg electricity prices from 8 eurocents per kwh to 40 eurocents.