The energy crisis threatens European semiconductor ambitions! Intel Delays Construction of German Factories for More Subsidies
Time:2022-12-23
Views:1305
Source: Associated Press of Finance Author: Bian Chun
According to German newspaper Volkstimme, Intel has given up the goal of building a large chip factory in Magdeburg, eastern Germany, in the first half of 2023, because the semiconductor giant hopes to get more public subsidies.
This may undermine Europe‘s ambition to play a greater role in the semiconductor market. After the COVID-19 pandemic and the conflict between Russia and Ukraine highlighted the long-term risks of the global supply chain, Germany and the EU are planning to strengthen the resilience of the European continent through more local chip manufacturing.
Energy surge drives up costs
Earlier this year, Intel announced its plan to build a factory in Magdeburg. It was originally scheduled to start construction in the middle of 2023. The German government promised to provide 6.8 billion euros in subsidies.
However, it is reported that the sharp increase in the price of energy and raw materials has disrupted Intel‘s original plan. Intel‘s initial cost budget was 17 billion euros (about 18 billion dollars), but now it needs to spend nearly 20 billion euros.
Hopes the government will provide more subsidies
Benjamin, spokesman of Intel? Benjamin Bartender said, "The challenge of geo zz has intensified, and the demand for semiconductors has declined, which means that we cannot give the exact date of commencement."
Intel added that the company was discussing with the government how to fill the "gap" in funding. "There is a funding gap in the current situation. We are working with government partners to promote the project.".
A spokesman for the German Ministry of Economy said that the country planned to support Intel‘s projects "within the framework of national assistance requirements and European chip bill standards". The Federal Government supports the EU‘s common goal of further expanding Europe‘s share in the global semiconductor market.
European semiconductor ambitions are under threat
In February this year, the European Commission announced the long-awaited A Chips Act for Europe. According to the bill, by 2030, the EU plans to use more than 43 billion euros of public and private funds to support chip production, pilot projects and start-ups, and vigorously build large chip manufacturers.
The EU also proposed an ambitious goal in the bill to increase the share of chip production in the world from 10% to 20% by 2030.
Although the European Chip Act has yet to pass the legislative process, it has prompted many companies, including Intel, to invest.
However, high energy prices, sluggish markets and the US Inflation Reduction Act may threaten Europe‘s semiconductor ambitions.
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