A computer graphic shows the semiconductor production planned in Magdeburg by the US group Intel.
(Photo: dpa)
Berlin Federal Minister of Finance Christian Lindner rejects higher subsidies for the chip factory planned in Magdeburg by the US group Intel. “There is no more money in the household,” Lindner told the Financial Times (FT). “We are currently trying to consolidate the budget, not expand it,” added the FDP leader.
According to the newspaper, Intel did not want to comment on the statements. The company said there was a gap in costs and that it was working with the government to close it.
Intel is planning to build a large plant in the state capital of Saxony-Anhalt. Originally, there was talk of an investment volume of 17 billion euros. Because of the generally increased prices and the associated higher construction and energy costs, the US group is now planning an investment of 27 billion euros, as the Handelsblatt reported at the beginning of the month based on information from government circles. That is ten billion euros more than when the project started in early 2021.
The increased investment sum puts the federal government under pressure. The chip manufacturer has been negotiating with the Federal Ministry of Economics for months about an expansion of investment aid for the plant in Magdeburg. So far, 6.8 billion euros had been promised, but Intel is now demanding around ten billion euros, according to government circles.
The demand meets with different echoes in the federal government. The Ministry of Economic Affairs and the Chancellery have signaled that they are willing to pay Intel higher subsidies, the Handelsblatt learned from government officials involved. The Federal Ministry of Finance, on the other hand, continues to insist that state aid will not be increased.
Economist: “Intel harms the start-up and innovation location”
Lindner had already expressed skepticism about possible financial aid for the chip factory in February. “We cannot be blackmailed,” he said in an interview with the Handelsblatt at the time. For him, 6.8 or more billion euros from German taxpayers is “not a sure-fire success”. “A US company that has made $8 billion in net income is not a natural recipient of taxpayer money,” Lindner said. “There are questions allowed.”
According to FT, Lindner also made it clear that he was not a big fan of subsidies and would refuse more help even if Intel were to increase the scope of the project. “The Chancellery and the Ministry of Economics will have to show where the additional financing is to come from.” There are various options for Intel. The federal cabinet has not yet formed an opinion.
The traffic light coalition has been struggling for a long time about the 2024 budget. The debt brake anchored in the Basic Law is to be observed again. To do this, additional costs due to the collective bargaining agreement in the public sector and higher interest rates must be compensated.
For the Economics Minister of Saxony-Anhalt, Sven Schulze (CDU), the matter is clear. Referring to the possible economic effects of the Intel settlement, he pleads for higher subsidies. “We have an opportunity to build a whole ecosystem for innovation,” he said.
>> Read also: Heated debate about Intel’s innovation location
Schulze’s party friend, the chairman of the Economic Committee in the Bundestag, Michael Grosse-Brömer, sees it like Lindner. “In view of the current level of debt, it is right if the finance minister intends to ensure a solid budget that complies with the debt brake,” the CDU politician told the Handelsblatt. “In any case, it will not be possible to make Germany attractive as a business location in the long term through state subsidies.” Rather, what is needed is a reduction in bureaucracy, a reduction in energy costs, more skilled workers and progress in digitization.
The SPD economic politician Sebastian Roloff quickly called for clarity about possible state financial aid. “I would like to see an understanding between Intel and the federal government so that progress can be made quickly here,” said the member of the Bundestag and co-head of the SPD-Left Party to the Handelsblatt. In principle, the settlement of Intel in Magdeburg is very welcome. However, the higher costs are currently presenting “great challenges” for everyone.
In addition to the federal government, the European Union has also been trying for months to attract American and Asian chip manufacturers with subsidies running into the billions. The background is also the desire to become more technologically independent of China.
To this end, the EU has launched the European Chips Act – a package of subsidies totaling 43 billion euros. The EU wants to double the production capacity for chips by 2030 in order to catch up with Asia and the USA.
More: Dispute on Intel’s settlement in Magdeburg – “We would get more out of it if we built an East German Harvard”