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Intel will receive 10 billion euros in subsidies to build a chip factory in Magdeburg, Germany. The American chip producer seems to have no more excuses to delay construction.

On Monday afternoon, Germany and Intel officially agreed on additional subsidies for constructing a chip factory. A total of 40 billion euros is available for the plant, with Intel investing 30 billion euros and Germany investing another 10 billion euros. That amount was confirmed to Reuters by a person involved in the negotiations.

Economic setback

The chip factory was originally supposed to be build with 6.8 billion euros in German subsidies. According to Intel, it was unfeasible to set up the chip factory with that amount due to economic setbacks. According to the U.S. manufacturer, more subsidies were needed, and a long period of negotiations followed. Intel hoped to raise the subsidy amount even higher, but Germany refused. In addition to financial support, the agreement includes a price ceiling on energy.

For Intel, the project will be more expensive than originally thought. The manufacturer originally estimated its own costs at 17 billion euros but is now adjusting that to 30 billion euros.

Olaf Scholz, Chancellor of Germany, welcomed the agreement: “Today’s agreement is an important step for Germany as a high-tech manufacturing location and for our resilience. With this investment, we are technologically catching up with the world’s leaders and increasing our own capacities for ecosystem development and microchip production.”

Multiple plants

Intel not only has plans to open a plant in Germany, as the manufacture shared plans recently to open plants in Israel and Poland. In 2021, Intel promised an 80 billion euro investment plan for European chip production. The amount was divided into several phases and that now becomes clear.