- Germany is compelling Intel Corp (NASDAQ:INTC) to boost its plans for a landmark €17 billion chip plant in exchange for higher subsidies marking the country’s most significant foreign direct investment since the second world war.
- Intel will likely receive €6.8 billion in subsidies from Berlin to build its manufacturing plant in the eastern city of Magdeburg, the Financial Times reports.
- Reportedly Intel wanted at least €10 billion in subsidies citing higher energy and construction costs. But German officials pitched for more increased investment to claim the higher contributions.
- Also Read: China Puts Pressure on Intel as US Sanctions Loom, Seeks Intel’s Support for Preserving Global Supply Chain
- Russia’s decision to cut gas exports to Europe after its invasion of Ukraine and high inflation prompted Intel to request more subsidies.
- However, additional capex for Intel would put financial pressure on the company at a critical time which recently shared plans to moderate capital spending after an unexpected slump in sales forced it to slash its dividend to save cash.
- The U.S. Chips Act has pressured the EU to match such efforts or lose to America.
- The venture is pivotal to EU ambitions to double its share of the global semiconductor market from less than 10% today to 20% by 2030 and reduce dependence on Asian suppliers for advanced chips catering to smartphones to electric vehicles.
- Price Action: INTC shares traded lower by 1.02% at $32.02 on the last check Thursday.
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