Intel is halting construction of a factory in Magdeburg, likely to be delayed by two years, company CEO Pat Gelsinger said Monday. The ailing chip company is struggling with losses and has launched a cost-cutting program.
Intel had initially announced the construction of two chip factories in the German state of Saxony-Anhalt. The first breakthrough was planned for this year. This should create around 3,000 jobs. 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.
Only a few months ago, Gelsinger said that Magdeburg should use the most modern production processes, with which Intel wants to catch up with the more successful competition. Production is expected to start in 2027 or 2028.
Red numbers
But the company is under pressure. In the last quarter alone, the company lost $1 billion — and analysts expect even more red numbers. CEO Pat Gelsinger is taking countermeasures, announcing in early August that it would cut about 15,000 jobs. That’s about 15 percent of the workforce. In total, he wants to save more than $10 billion next year.
In Poland, plans for this period are also being put on hold. At the same time, Intel confirmed investments in new factories in its home market of the US and is developing new chips with Amazon’s cloud division.
Gelsinger’s strategy involves Intel becoming more of a contract manufacturer for other chip developers. The group must master the most modern production processes in order to compete with established manufacturers such as TSMC from Taiwan. Part of these plans was also the construction of the factory in Magdeburg.
First building permit already issued
A few weeks ago, the first building permit for the factories in Magdeburg was issued. This was preceded by months of processing a building application of approximately 2,000 pages and a hearing with associations and municipalities.
The European Commission would still have to approve the German government’s financing. 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, after which construction would begin.
Source: Krone
I’m Ben Stock, a journalist and author at Today Times Live. I specialize in economic news and have been working in the news industry for over five years. My experience spans from local journalism to international business reporting. In my career I’ve had the opportunity to interview some of the world’s leading economists and financial experts, giving me an insight into global trends that is unique among journalists.
