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An Intel executive has confirmed that the company is hashing out the details of a new chip plant in Magdeburg with the German government.

Keyvan Esfarjani, Intel’s Chief Global Operations Officer, said the company is committed to making the project a success while speaking to Reuters at a chip conference hosted in California.

The comment comes after a German newspaper reported that Intel had put the brakes on the construction of a factory in Magdeburg in the first half of 2023. “While we have to pace ourselves in this current environment, we can’t take our eye off the ball”, Esfarjani said.

In constant talks

The German newspaper cited sources saying Intel asked for more public subsidies. Reuters asked Germany’s economy ministry about the project, which clarified that the government is in constant talks with Intel and the European Commission.

“The type and (maximum possible) amount of funding depends on approval by the EU Commission, and for this, clear benchmarks and data on the company’s project are needed”, a spokesperson said.

The German newspaper also reported inflation was causing rising costs, something Esfarjani declined to comment on.

Attracting investments

Esfarjani did mention that, since the project’s initial announcement, “geopolitical challenges have become greater, semiconductor demand has declined, and inflation and recession are disrupting the global economy”.

Esfarjani pointed out that Intel had already bought the land where the fab would be located in late 2022. In March of the same year, Intel announced Magdeburg as the site for a mega chip factory as part of an $88 billion investment across Europe.

EU governments are competing to attract some of that investment by introducing favourable subsidies and conditions for chip manufacturers like Intel. Italy, for instance, is set on winning the race.