Massive savings program

Intel puts construction of chip factory in Magdeburg on hold

This is what the new Intel site in Magdeburg should look like.

(Bild: Intel)

Intel is putting the construction of a plant in Magdeburg on hold. The project will probably be delayed by two years, announced company boss Pat Gelsinger on Monday. The struggling chip company is battling with losses and has initiated a cost-cutting program.

Intel had announced the construction of initially two chip factories in the German state of Saxony-Anhalt. The ground-breaking ceremony was planned for this year. This should create around 3000 jobs. The investment was estimated at around 30 billion euros. Last year, the German government held out the prospect of state aid of 9.9 billion euros for the relocation.

Just a few months ago, Gelsinger had said that the most modern production processes would be used in Magdeburg, with which Intel intends to catch up with its more successful competitors. Production was expected to start in 2027 or 2028.

Red numbers
But the Group is under pressure. In the last quarter alone, the company posted a loss in the billions - and analysts are expecting further losses. Group CEO Pat Gelsinger is taking countermeasures and announced around 15,000 job cuts at the beginning of August. That is around 15 percent of the workforce. Overall, he wants to save more than ten billion dollars in the coming year.

The plans in Poland will also be suspended for this period. At the same time, Intel has confirmed investments in new plants in its home market of the USA and is developing new chips with Amazon's cloud division.

Part of Gelsinger's strategy is for Intel to become more of a contract manufacturer for other chip developers. The Group aims to master state-of-the-art production processes in order to compete with established manufacturers such as TSMC from Taiwan. The construction of the plant in Magdeburg was also part of these plans. 

First building permit already granted
An initial building permit for the factories in Magdeburg had already been granted a few weeks ago. This was preceded by several months of examination of a building application of around 2,000 pages and a hearing procedure involving associations and local authorities.

The EU Commission still had to approve the German government's funding. Representatives of the state government of Saxony-Anhalt had recently repeatedly expressed optimism that the EU would approve the state aid by the end of the year and that construction would then begin.