Intel postponed the creation of chip factories in Germany for 5 years – the authorities now do not know what to do with subsidies

Intel recently decided to delay construction of the Intel Fab 29 complex of two semiconductor foundries in eastern Germany in Magdeburg by two years. This has sparked controversy within the German government over the continued use of €10 billion in government subsidies from the Climate and Transformation Fund (KTF), originally promised to support Intel’s investments.

Visualization of the Intel plant in Magdeburg. Image source: Render of the Intel Magdeburg plant

Already this year, an initial tranche of this amount in the amount of €3.96 billion was approved to support the project. Due to the freezing of the Intel project for the period until 2029–2030. Finance Minister Christian Lindner advocated for a reallocation of funds, proposing to use them to reduce the $12 billion federal budget deficit as a response to the current economic situation. According to the resource HardwareLuxx, the proposal of the head of the Ministry of Finance to send money to the budget raised objections from the Minister of Economy Robert Habeck, whose department oversees the KTF fund, intended to support climate projects, as well as the introduction of advanced technologies. It is expected that the fate of the subsidies will be decided on Wednesday at a meeting of the coalition committee.

In connection with the freezing of the project, questions also arose as to whether it will be implemented in two years according to the agreed plan or whether new conditions will have to be agreed upon. If Intel cancels the project, questions will arise about the use of the land originally intended for the company’s factories.