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US chipmaker Intel has paused its planned new factories in Magdeburg, Germany and Wrocław, Poland, amid financial woes, in a blow to the EU efforts to build up domestic chipmaking capacity.
“We will pause our projects in Poland and Germany by approximately two years based on anticipated market demand,” said Intel CEO Patrick P Gelsinger in a blog post late Monday (16 September) evening.
The two projects, partly funded through state aid, are key parts of the EU’s efforts to boost its domestic semiconductor industry to increase its resilience and independence. The EU Chips Act, in force since September 2023, aims to double Europe’s share of global semiconductor manufacturing to 20% by 2030.
The firm is holding steadfast on its investments in the US, which has also been trying to boost its chipmaking capacity.
On Monday, Intel also announced it had been awarded an additional $3 billion (€2.7 billion) of direct government funding to develop semiconductors for defence and intelligence. That’s on top of $8.5 billion of direct funding, up to $25 billion in tax cuts, and loans up to $11 billion that the firm previously agreed on with the US Department of Commerce.
Intel’s €30 billion investment in Magdeburg was the biggest project planned under the EU Chips Act, with a third of the sum from German subsidies.
The firm’s €4.2 billion project in Poland has been hailed as the “largest investment in Polish history.” Of that, €1.7 billion (PLN 7.4 billion) was to come from state aid, according to Polish media.
The ambitious plans appear to have been hampered by Intel’s financial troubles. Intel is nearing its third consecutive year of declining sales, with its share price losing about 56% of its value in 2024, making it one of the second-worst-performing stocks on the S&P 500 index.
In August, Intel reported losses of $1.6 billion (€1.4 billion) for the second quarter of 2024, as well as significant layoffs, “structural and operating realignment across the company,” and a reduction in spending by more than $10 billion in 2025 compared to projections.
“All eyes have been on Intel since we announced Q2 earnings,” Gelsinger wrote, who has tried to expand the firm’s network of factories amid declining sales.
The giant considered several options for dealing with the losses, including spinning off its manufacturing arm, before settling on halting its expansion in Germany and Poland,” Bloomberg reported.
“We recently increased capacity in Europe through our fab in Ireland, which will remain our lead European hub for the foreseeable future,” Gelsinger wrote.
In August, Commission President Ursula von der Leyen and German Chancellor Olaf Scholz attended the groundbreaking ceremony for a new chip factory of Taiwanese world market leader TSMC in Dresden, Germany, doubling down on the aim to boost regional semiconductor production.
[Edited by Eliza Gkritsi/Alice Taylor-Braçe]
