Intel postpones chip factories in Germany and Poland, and Europe's chip manufacturing industry development plan is affected
"Intel Corporation of the United States will produce customized AI (artificial intelligence) chips for Amazon and postpone the construction of factories in Germany." Bloomberg reported on the 16th. The news that Intel postponed the German factory quickly attracted attention in Germany. Deutsche Presse-Agentur said on the 17th that Intel CEO Pat Gelsinger announced on Monday evening that the company's chip factories in Saxony-Anhalt, Germany and Wroclaw, Poland will be delayed for two years, and made it clear that this is based on estimates of expected market demand. Many foreign media said that this move will impact Europe's chip manufacturing industry development plan.According to reports, Intel announced last year that it would build two chip manufacturing plants in Magdeburg, the capital of Saxony-Anhalt, Germany, which will create about 3,000 jobs locally. The groundbreaking is scheduled to take place this year. Last year, the German federal government promised to provide 9.9 billion euros in state subsidies, which the European Commission still needs to approve. On the other hand, according to Polish media reports, Intel was also originally going to receive 1.7 billion euros in subsidies from the Polish government. Gelsinger also said that Intel hopes to catch up with its competitors by using the most modern production processes at the Magdeburg plant.
"Even if the two countries give a lot of subsidies, it still needs to raise the rest of the money." Germany's "Times" reported that the reason for stopping the construction of factories in the two countries is that Intel is facing financial problems. Intel lost $1 billion in the last quarter alone, and analysts expect further losses. Germany's "Frankfurter Allgemeine Zeitung" said that Intel has also depreciated sharply on the stock market recently. Its stock price has fallen by more than 50% so far this year. After announcing weak data and layoffs in August alone, the stock price fell 26% in a single day. Bloomberg reported that Intel still has a long way to go to win back the full confidence of Wall Street. After years of losing to competitors and declining technological advantages, the Silicon Valley pioneer is currently valued at less than $90 billion, and it is no longer one of the top 10 chip companies. With shrinking sales and accumulating losses, Gelsinger announced in early August that it would lay off about 15,000 people, about 15% of the total number of employees. He hopes to cut the budget by more than $10 billion next year and is currently further controlling expansion plans.
But while postponing the construction of several factories in Europe, Gelsinger confirmed that he would be committed to expanding in the United States in Arizona, New Mexico, Oregon and Ohio. In the United States, Intel has also received billions of dollars in subsidies. Gelsinger announced that Intel will develop and manufacture artificial intelligence chips for Amazon's cloud division.
Regarding the decision to postpone the construction of several factories in Europe, AFP reported that this is a heavy blow to the German and Polish governments, which have been providing huge subsidies for these projects and claiming that they will promote the development of their own industries. The epidemic and the conflict between Russia and Ukraine have made the risks of over-reliance on supply chains more obvious, and EU countries are seeking ways to increase semiconductor production. European media "Euractiv" said this has dealt a blow to the EU's efforts to increase chip manufacturing capabilities. Previously, the "EU Chip Act" came into effect in September 2023, aiming to double Europe's share in the global semiconductor manufacturing industry to 20% by 2030. The postponed project is a key part of the EU's efforts to increase the resilience and independence of the semiconductor industry.
"This is bad news for Germany!" commented the German newspaper Bild. "This is a flagship project aimed at revitalizing the German economy." German Chancellor Scholz also supports the construction of a chip factory. In August, he and European Commission President von der Leyen attended the groundbreaking ceremony of TSMC's new chip factory in Dresden, Germany, and expressed their commitment to redouble their efforts to promote regional semiconductor production. Scholz previously said: "I am very happy that Intel will soon produce the most advanced semiconductors for us. This is very good news for Germany as a technology center." However, this chip dream has been put on hold.
