Intel may want to start building its German chip factory in 2024. Board member Keyvan Esfarjani reports this in an interview. 2024 is later than initially communicated. The company is sticking to the investment plans, despite economic uncertainties.
Intel has not yet stated a specific date on which it wants to start construction. “At the moment we have planned 2023 for obtaining permits and maybe around 2024 for construction to start”, esfarjani tells Zeit Online at the World Economic Forum in Davos. The company bought the land in Magdeburg at the end of last year and says that planning is progressing “soon” in Magdeburg and the state of Saxony-Anhalt to date.
Esfarjani emphasizes that Intel remains committed to its investment plans in Germany , despite economic uncertainties and falling demand for semiconductors. The company is making that reassurance after earlier this month plans for a new development center in Israel has been scrapped due to budget cuts. That center is now a parking lot.
Intel calls the factory in Germany ‘strategically important’ given rising geopolitical tensions and the global effort to better distribute chip production across different regions. Esfarjani says the company is suffering from rising construction costs and more expensive raw materials, in addition to high energy prices and a shortage of construction workers. The board member calls government support an important factor for this. The company will receive 6.8 billion euros subsidy as part of the European Chips Act, which is currently still being discussed by the European Parliament.
“We are not questioning the project, but you have to produce computer chips at a certain price if you are internationally And of course the government and the city of Magdeburg play a role, alongside us as a company, so that production is cost-efficient,” Esfarjani continued in the interview. He says about rising energy prices: “A chip factory with electricity prices of 50 cents is not competitive.” Initially, a price of 6 to 8 cents per kilowatt hour was planned, but this has since risen to 40 to 50 cents.
In September Intel CEO Pat Gelsinger held a Q&A with media, with Tweakers also present. At that time, the CEO called rising energy costs “not a determining factor” for the construction of his German chip factory. “Obviously we use energy, but that’s not the biggest expense of a factory; it’s more the cost of the equipment and the building,” Gelsinger said at the time.
Intel announced its expansion plans in Germany in March last year. The company wants to build a campus in Magdeburg. Initially, two factories will be built on the campus, which should produce advanced chips from 2027. In time, the campus can grow into eight factories. Construction was supposed to start at the beginning of this year, but it will now start in 2024. It is unknown whether the start of production will be delayed as construction starts later than expected.
