The chipmakers have likely benefited the most so far from the worldwide competition to develop domestic manufacturing and end dependence on foreign suppliers for these essential components.
Due to government incentives, Intel Corp. has announced plans to invest more than $50 billion in new operations in Poland, Germany, and Israel just in the past week.
To entice companies like Intel, Taiwan Semiconductor Manufacturing Co., and Micron Technology Inc., the US, the European Union, Japan, and India have collectively pledged more than $100 billion in subsidies.
While chipmakers try to change the global manufacturing landscape, the subsidies serve as a critical cost-growth hedge for them. The factories represent for the governments the creation of jobs, financial investment in infrastructure, and supply-chain security for the semiconductors required for everything from home appliances to mobile phones and vehicle manufacturing. They wager that having more plants in more countries will protect them against disruptions in light of Russia’s invasion of Ukraine and China’s ongoing threat to annex Taiwan.
The €30 billion ($32.8 billion) factory in Germany, where Intel negotiated a subsidy package worth approximately €10 billion, will be the company’s largest layout in Europe.
During the initial phase of building, Intel’s new facility in Magdeburg is anticipated to generate 7,000 construction employment, as well as about 3,000 permanent high-tech jobs and tens of thousands more opportunities “across the industry ecosystem.”
The Santa Clara, California-based chipmaker and the German government first agreed to €6.8 billion in subsidies. However, the firm was able to make the case that despite the plant’s original €17 billion price tag ballooning due to advancements in technology, inflation, and rising energy prices. Germany consented to incorporate an additional €3 billion in public help in a package with price limitations.
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