Inflated reports about failing Intel fabs in Magdeburg
Saxony-Anhalt has a plan B if Intel does not build its Magdeburg semiconductor plant after all. However, this is very unlikely to happen.
Render image of Intel's Madgeburg site as it could look one day.
(Image: Intel)
Intel's current losses of billions of euros and canceled projects have raised the question of the status of the planned semiconductor plants in Magdeburg, which will cost a good 30 billion euros. Specifically, the left-wing parliamentary group in the state parliament of Saxony-Anhalt sent a comprehensive list of questions to the state government, which also addresses possible alternatives.
The so-called major inquiry comprises more than 100 questions and all answers on 68 PDF pages. On page 10, the state government describes what would happen if Intel were to cancel its investments after all:
"[...] The unlikely event that neither the sale or rental of space nor the sale of business shares can be realized is conceivable at best if the anchor investor Intel cancels. In this scenario, it is planned to market the space to alternative industrial and commercial companies."
Der Spiegel then ran the headline: "Saxony-Anhalt prepares for the failure of the Intel factory". The report was picked up by international media, in some cases with the wording that the Madgeburg semiconductor plant was on the brink of collapse.
Withdrawal is unlikely
However, this case is very unlikely. Intel sees chip contract manufacturing (Intel Foundry) as its future core business. The company's CEO Pat Gelsinger is deliberately taking a bet on the future: With the Intel 18A manufacturing process, the aim is to overtake the global market leader TSMC in terms of technology and attract the first major wave of customers.
From then on, Intel wants to manufacture chips for other companies on a larger scale. Intel will not start operations in Magdeburg until the end of 2027 at the earliest – by which time the semiconductor industry is likely to look very different again. This is because the strong fluctuations in supply and demand (hog cycle) have been a well-known feature of this industry for decades.
Intel is currently cutting many investments, although these relate to smaller projects than the Magdeburg site: the design center in France and an advanced packaging plant in Italy are off the table for the time being, but are also of secondary importance for Intel's strategy.
So far, Intel has given no indication that the Magdeburg semiconductor plants could falter. According to information from heise online, some politicians in Saxony-Anhalt are particularly uneasy because they are used to cooperating with German car manufacturers. Planned projects are said to be buried more quickly.
Frank Bösenberg, Managing Director of neighboring Silicon Saxony, also expresses his displeasure that a single statement about Intel Magdeburg triggered such disproportionate reactions.
Negotiations are still ongoing
Meanwhile, the major inquiry provides an insight into the status of Intel funding. The new semiconductor plants will become part of the newly founded High-Tech Park Sachsen-Anhalt GmbH, which is to support other companies, including German ones in future. An overview page currently lists Intel and Avnet as members.
To date, the German government and Intel have signed a funding agreement that stipulates a funding amount of 9.9 billion euros for a total investment of more than 30 billion euros. The federal government and Intel are still negotiating a public-law grant agreement that specifies the framework conditions.
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