Germany And Intel Both Want More From Planned Magdeburg Mega-fab

If Intel wants larger subsidies for its Magdeburg mega-fab, German officials think the x86 giant should increase its investments to match.

Citing people familiar with the matter, the Financial Times reported on Thursday that the German government is willing to consider boosting subsidies, but only if Intel is willing to spend more on infrastructure too.

"It's logical that if the scale of the investment is increased, then the level of subsidy would also rise," Sven Schultze, the economy minister for Saxony-Anhalt, told the FT.

The debate over the size of Chipzilla's assets comes after multiple reports that Intel had pressured the German government for larger subsidies to offset rising energy and material costs, and hinted at delaying the project. Intel now expects the facility to cost somewhere in the neighborhood €20 billion ($22.1 billion) to complete.

Rising costs have also impacted the cost of Intel's two Arizona plants, which are now expected to cost 50 percent more than when first announced.

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To date, the German government has committed €6.8 billion ($7.5 billion) to the Intel's planned builds — about 40 percent of the project's original €17 billion ($19 billion) price tag. However, last month, Bloomberg reported that Intel pushed for an additional €4-5 billion in subsidies.

The Register asked Intel for comment; we'll update our story if we receive a substantive response.

While it appears resolving the Magdeburg mega-fab funding dispute could be as simple as Intel throwing a few more billions of euros at the project, the giant chipmaker's financials have taken a beating as it contends with stiff competition from rivals — particularly AMD — plus a slump in sales and the ongoing impact of COVID-caused supply chain issues.

Last northern Autumn Intel CEO Pat Gelsinger, faced with double-digit revenue declines, said the company would cut as much as $10 billion in annual spending by 2025.

The decision was followed by a string of high-profile cuts, including the cancellation of a pair of research and development centers in Oregon and Israel that were expected to cost nearly $1 billion. Intel has also canned much of its GPU roadmap, and sold off its server business.

At the same time Intel made those cuts, it asked the German government for a larger cut of taxpayer dollars.

However, Intel's position could soon improve. The European Commission is expected to sign its own CHIPs funding bill into law any day now. The bill would unlock roughly €43 billion ($48 billion) to attract semiconductor investment in the region. ®