Intel’s plan to assemble a large chip plant in Magdeburg, Germany, is arguably the centrepiece of the EU’s technique to ramp up home manufacturing of semiconductors.
But money circulation has confirmed to be a significant stumbling block for the mega-project. Intel attributes this to rising prices, partly a results of Russia’s invasion of Ukraine.
To shut the funding hole, final month, the US semiconductor large requested a further €4-5 billion euros in subsidies to assemble the plant.
But German officers need Intel to satisfy them in the center — they may take into account boosting subsidies, however provided that the corporate is keen to spend extra on infrastructure.
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“It’s logical that if the scale of the investment is increased, then the level of subsidy would also rise,” Sven Schultze, the financial system minister for Saxony-Anhalt, instructed the Financial Times.
Intel had initially estimated that the challenge would price €17 billion and had reached an settlement for €6.8 billion in authorities subsidies. Now, nevertheless, the corporate expects to spend €20 billion, citing rising vitality and development prices.
Construction of the chip plant has already been delayed, and resolving the funding dispute will likely be important if Intel is to ship on its broader plans to speculate €80 billion over the subsequent decade into the EU’s semiconductor business.
While it could appear a easy matter of throwing a number of billions extra on the challenge, the chipmaker is dealing with severe money circulation issues. Late final yr, Intel CEO Pat Gelsinger, stated the corporate would minimize as a lot as $10 billion in annual spending by 2025.
The German ministry stated it’s at present discussing methods to fill the challenge’s price hole. It additionally added that any further funding would probably want approval from the European Commission first.
Additional subsidies for the challenge might come from the European Chips Act, which goals to mobilise greater than €43 billion to finish Europe’s dependence on China and produce 20% of the world’s semiconductors by 2030.
The act is anticipated to get the inexperienced mild subsequent week, which might throw Intel an important monetary lifeline.
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