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Germany and Intel agree on €10 billion Chip Plant Subsidies

Intel Corp. will be inking an agreement for the US company to receive subsidies worth €10 billion ($10.9 billion) with Germany with an objective of installing a semiconductor manufacturing facility in the eastern part of the country.

Pat Gelsinger Chief Executive Officer of Intel and Chancellor Olaf Scholz will be attending the agreement signing function for the accord in Berlin.

Intel had postponed the start of the construction of the plant due to the economic headwinds, which it initially agreed to build in the city of Magdeburg with the government aid of €6.8 billion.

According to the sources, the enhanced package now agreed will include both price caps on energy as well as traditional aid in the form of financial subsidies. Under Gelsinger, Intel has embarked on a huge expansion program aimed at diversifying manufacturing hubs for critical components and recapturing its previous dominance of the industry, currently concentrated in East Asia.

Earlier the Magdeburg project was an important aspect of the plans after it outbid various other sites in Europe. However, it somehow foundered after a steep rise in the cost of construction and material and soaring energy prices.

Intel now expects to spend €30 billion in the Magdeburg project which it originally estimated that would cost €17 billion. It was known that Intel was expecting roughly 40% of its costs to be subsidized, like the most projects that will receive government funding through the European Union’s Chips Act.

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