INVESTMENT: FAULTLINES IN SEMICONDUCTOR PLAN - Germany’s finance minister has ruled out demands from Intel for an
additional €3 billion in funding for its new fabrication plant, currently under construction in Magdeburg. The company says that increased energy and construction costs mean that the €6.8 billion it was due to receive is insufficient and it now needs closer to €10 billion. Intel’s project is the largest foreign investment in post war German history and is seen as pivotal to EU plans to double its share of the global semiconductor market from less than 10 per cent to 20 per cent by 2030. Many in the German government believe every effort must be made to match the huge support being provided under President Biden’s Chips and Science Act, which includes $52 billion in funding to boost US domestic semiconductor manufacturing. However, a number
of economists argue that subsidies are a waste of taxpayers’ money and that the ambition to reduce dependence on Asian suppliers is unrealistic, given the complexity of supply chains in the semiconductor industry. Some parties in the coalition government are also likely to be resistant to increased subsidies. But Chancellor Olaf Scholz is believed to be open to the idea, encouraged that Intel might increase both the scope of the project and its investment.
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