News
The news follows Intel’s disappointing Q2 results last month
US chipmaker Intel has said it will pause its plans for new chip factories in Germany and Poland for two years, citing lower-than-expected demand and financial pressures.
Intel had announced plans to build a €30 billion factory in Magdeburg, Germany, and a €4.6 billion facility in Wrocław, Poland in 2022 and 2023, respectively.
Both projects were heavily subsidised by the respective national governments, with the European Union viewing the investment as key steps in boosting the bloc’s domestic semiconductor capabilities and ease reliance on China’ manufacturing capacity. Indeed, German Chancellor Olaf Scholz had hoped the move would help the country “become one of the world’s major semiconductor production locations”.
However, Intel’s recent financial struggles, including a $1.6 billion loss in Q2 2024, has led to a reassessment of these project. As a result, both the German and Polish fabs will be delayed by about two years, with Intel instead focussing on its new US fab, where it is also receiving significant government support..
“We recently increased capacity in Europe through our fab in Ireland, which will remain our lead European hub for the foreseeable future. We will pause our projects in Poland and Germany by approximately two years based on anticipated market demand,” said CEO Gelsinger in a published note to employees this week.
“We have a lot of work ahead to drive greater efficiency, improve our profitability and enhance our market competitiveness,” continued Gelsinger.
Despite the European manufacturing pause, the company gave the green light to other investments, particularly in the US. This will include an expansion of a preexisting strategic collaboration with Amazon Web Services (AWS). Secondly, Intel secured $3 billion under the CHIPS Act to produce secure semiconductors for the US government, reinforcing its position in the domestic chip supply chain.
Finally, the company aims to spin out Intel Foundry, its manufacturing arm, into an independent subsidiary. This, Intel says, will give “external foundry customers and suppliers with clearer separation and independence from the rest of Intel”. It will also provide the flexibility to evaluate independent sources of funding, the company said.
How will this semiconductor setback impact the German tech market? Join the industry in discussion at Connected Germany 2024
Also in the news:
Meta resumes use of UK user posts to train its AI models
Verizon’s 4,800 job cuts will cost over $1.9 billion
CMA questions Vodafone–Three merger after second probe