US semiconductor giant has postponed plans to build two megafabs in Germany and a chip facility in Poland for around two years as part of a huge cost-cutting initiative. The delay was announced by CEO Pat Gelsinger on 16 September 2024 in a statement to employees. Planned construction of the facilities in Magdeburg, Germany and Wroclaw, Poland has been put on temporary hold as the company attempts to mitigate its deteriorating financial situation. Intel shares have declined by over 50% this year as investors flock to competitors pioneering AI chip technologies. As part of the series of measures to alleviate financial pressure, the semiconductor manufacturer will also reduce employee numbers by 15%.
“We must continue acting with urgency to create a more competitive cost structure and deliver the USD 10 billion in savings target we announced last month,” Gelsinger said in a press release and letter to employees.
“We will pause our projects in Poland and Germany by approximately two years based on anticipated market demand,“ he explained.
“There are no changes to our other manufacturing locations. We remain committed to our U.S. manufacturing investments and are moving forward with our projects in Arizona, Oregon, New Mexico and Ohio,“ Gelsinger added in the statement
Magdeburg megafab
The project in Germany was first announced in March 2022 with construction originally planned to start in early 2023, and production to begin in 2027. In June 2023, the company expanded the scope of the project, announcing it would now invest more than EUR 30 billion total rather than EUR 17 billion originally planned. The German federal government agreed to provide EUR 9.9 billion in state subsidies. The new fab is expected to create 7,000 construction jobs over the course of the first phase of the build, and approximately 3,000 permanent high-tech jobs at Intel and tens of thousands of additional jobs across the industry ecosystem.
Commentators believe the delay will put even more pressure on the already strained German economy. After the announcement by Gelsinger, Finance Minister Christian Lindner called for the funds earmarked for Intel to be redistributed to cover a federal budget deficit of EUR 12 billion.
