The delay in the construction of Intel plants in Germany ruins the European Union’s plans to achieve technological sovereignty

This week, Intel management officially announced that this American corporation will refrain for at least two years from starting a project to build two advanced semiconductor components production plants in eastern Germany. This step could seriously undermine Europe’s technological sovereignty, as Politico notes.

Image Source: Intel

Let us recall that since the year before last, the EU authorities have been trying to stimulate the development of the regional semiconductor industry, and even adopted the so-called “European Chip Law,” which provides for the allocation of up to 43 billion euros in subsidies for the construction of new chip production plants in Europe. By the end of 2030, the EU authorities would like to achieve a 20% share of the global market for advanced semiconductor components in terms of localization of production in the region.

In 2022, this figure did not exceed 9%, but if the implementation of the program stalls, as representatives of the European Commission warned in July of this year, then by the end of the decade it will not grow beyond 11.7%. Let us add that German Federal Chancellor Olaf Scholz, after Intel’s decision to delay the construction of German enterprises, expressed hope for the feasibility of implementing this project in the future and its financial support. Intel initially intended to spend about 30 billion euros on the construction of two enterprises in Magdeburg, of which at least 10 billion would be covered by subsidies. A Polish chip packaging and testing facility, which the company also hesitated to build, would have required about 5 billion euros in investment, but more than a third of that would have been covered by subsidies.

Last month, TSMC ceremoniously laid the foundation for a joint venture in Germany, but it will not only be limited to a construction budget of about 10 billion euros, but will also produce low-end chips used primarily in the automotive industry. The latter in Europe, by the way, is not going through the easiest times, so the feasibility of this project can be disputed. Considering that Intel previously abandoned the construction of a plant in Italy and a research center in France, the initiative of the EU authorities to revive the regional semiconductor industry can be considered not entirely successful at this stage of implementation.

It is noteworthy that the head of the European Commission, Ursula von der Leyen, at the groundbreaking ceremony for the TSMC joint venture in Germany last month, mentioned the amount of 115 billion euros that the bloc’s countries and private sources of capital are ready to invest in the development of the European semiconductor industry. She did not specify in what proportion these funds would be distributed among funding sources, but it is highly likely that the amount of 115 billion euros combines both government subsidies and private investments from companies. Taking into account the upcoming change in the composition of the European Commission, the prospects for the further implementation of the plan are becoming increasingly vague.