Europe needs microprocessor factories, but large companies can only be attracted by record subsidies from EU countries. An example can be Intel, which will open a mega-factory of microprocessors in Germany with a total investment of 30 billion euros. A third of the money will come from the German state, but this is controversial, especially since Germany is experiencing a budget crisis.
In March 2022, Intel announced the construction of a mega-factory of microprocessors in Germany with a total investment of 17 billion euros and received subsidies of 6.8 billion euros from the German authorities.
At the same time, the company announced that the total investment value will be 30 billion euros, and the requested subsidies will be 10 billion euros. In June 2023, German Chancellor Olaf Scholz signed documents that gave the green light to this investment and through which the German state committed to allocate 10 billion euros in subsidies for the plant in Magdeburg. This is the largest “cheque” paid by the German state for the investment of a foreign company.
The plant will be ready for production in 2028, creating 3,000 direct jobs and another 7,000 indirect jobs. Germany’s subsidy is an average of one million euros per job.
How does the head of Intel justify such a request? Pat Gelsinger, CEO of Intel, says in an interview for Le Monde that the money provided by the German state will allow Intel’s megafactory to be competitive in the fight against factories in Asia. He heads the American company from 2021 and justifies the subsidies that Intel has received in the US and Europe as the need to maintain competition with chips made in China. Without subsidies, European factories have no chance.
The head of Intel says that the same thing is happening with a large factory in Ohio (USA), and for the factory to be competitive, several parameters must be taken into account: the price of energy, salary costs, construction costs and those with high -technical equipment. It is still more difficult, because you have to make estimates for the next 15 years.
Several studies show that the gap in microprocessor manufacturing competitiveness between Asia and the rest of the world is several tens of percent.
The total market for microprocessors is around $600 billion and could reach $1 trillion in 2030.
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Source: Hot News
Lori Barajas is an accomplished journalist, known for her insightful and thought-provoking writing on economy. She currently works as a writer at 247 news reel. With a passion for understanding the economy, Lori’s writing delves deep into the financial issues that matter most, providing readers with a unique perspective on current events.