It was supposed to be a flagship project with 3,000 jobs. Now Intel has postponed the plans for its factory in Magdeburg. The reason is the company’s austerity measures.
The struggling chip company Intel is putting the construction of a factory in Magdeburg on hold. The project will probably be delayed by two years, said company boss Pat Gelsinger. Intel is struggling with losses and has introduced a cost-cutting program.
Intel had announced the construction of two chip factories in Saxony-Anhalt. The groundbreaking ceremony was planned for this year. Around 3,000 jobs were to be created. The investment was estimated at around 30 billion euros. Last year, the federal government promised state aid of 9.9 billion euros for the settlement.
Just a few months ago, Gelsinger said that the most modern production processes would be used in Magdeburg, with which Intel wants to catch up with its more successful competitors. Production was expected to start in 2027 or 2028.
Massive savings program: Intel cuts 15,000 jobs
Intel is under pressure. In the last quarter alone, the company incurred billions in losses – and analysts are expecting further losses. CEO Pat Gelsinger is taking action and announced at the beginning of August that he will cut around 15,000 jobs. That’s around 15 percent of the workforce. In total, he wants to save more than ten billion dollars by next year.
Plans in Poland will also be suspended for this period. At the same time, Intel confirmed investments in new factories in its home market of the USA and is developing new chips with Amazon’s cloud division.
A first building permit for the factories in Magdeburg was issued a few weeks ago. This was preceded by several months of reviewing a 2,000-page building application and a hearing with associations and municipalities.
The EU Commission would have had to approve the federal government’s funding. Representatives of the state government of Saxony-Anhalt had recently repeatedly expressed optimism that the EU would release state aid by the end of the year and that construction would then begin.
Intel once dominated the industry
Gelsinger’s strategy includes making Intel more of a contract manufacturer for other chip developers. The company is to master the most modern production processes in order to compete against established producers such as TSMC from Taiwan. The construction of the plant in Magdeburg was also part of these plans.
Intel once dominated the chip industry, but then fell behind. A decisive moment was the lost battle for space in smartphones. Intel hoped to transfer its strength in the PC business to mobile devices – but more economical processors prevailed in computer cell phones. Smartphone chips therefore do not come from Intel, but from competitors such as Qualcomm or TSMC.
Source: Stern