Europe reeks of desperation and Intel is in a good position because, together with the German government, they will release a 6.8 billion subsidy for the Magdeburg factory: 40% of the total cost. Intel would pay the remaining 60% out of its own pocket.
This is great news, and we hope this will help Europe because the investment is a real boondoggle. It will come out of the pockets of Germans and Europeans, but most of all, Germans will suffer the most because not a few jobs will be created. This is a gigafactory, which we have talked about before.
Intel factory in Europe in numbers: 6.8 billion euros in subsidies
The Americans are clapping their hands, knowing that they will receive 40% of the cost of Intel’s factory in Magdeburg (Germany) from Europe. The total cost is an estimated 17 billion euros, and they will receive the 6.8 billion in installments rather than all at once.
Initially, they will pay nearly 2.7 billion to Intel this year to start mobilizing all the resources, while payments will follow from 2023. As always, Europe is moving the chips with rules under its arm, such as the important project of common European interest and the chip law.
Europe’s goal is to have 20% of semiconductor production on our continent by 2023 and we have to compete with the Americans and Asians. The Asians (China, South Korea, and Taiwan) are ahead in this race, and 2nm and 3nm chips will soon hit the market en masse.
Intel has done very well in Europe, but the truth is that the company has had serious problems advancing lithography in its fabs. In contrast, TSMC and Samsung have easily undercut the 10nm mark, so it remains to be seen what will happen in Europe.
The Magdeburg mega-factory will start production in the first half of 2023, and the first chips should be made in 2027. There will be two fabs in one, which will be capable of advanced processes (20A up) for both Intel and customers.
In addition, Germans will benefit from 3,000 jobs, though we expect they will be able to transport people from all over the world, with priority given to European citizens. Tens of thousands of additional jobs are also expected to be created among suppliers and partners.
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