Intel invests 17 billion euros in Germany to build super chip manufacturing plant

The US semiconductor manufacturer Intel has chosen Magdeburg for its European Gigafactory. This is the largest foreign direct investment in Germany and Europe to date.

Berlin, March 15, 2021 – The city of Magdeburg in the German state of Saxony-Anhalt has beaten competitors from across Europe to attract a landmark investment from Intel, the world’s largest semiconductor manufacturer. Intel will initially invest 17 billion euros in Germany, but will invest around 80 billion euros in the European Union in the future if it builds all of its planned factories or “fabs”. In comparison, carmaker Tesla is investing 5.8 billion euros in its Gigafactory on the outskirts of Berlin.

Robert Habeck, Germany's Federal Minister for Economic Affairs and Climate Protection, said: "Intel's investment in Magdeburg is an important boost to the economy in difficult times and an important step forward for Europe's digital sovereignty."

Robert Hermann, managing director of Germany Trade & Invest, said: "Intel's decision is a huge victory for Germany as a business location. It underscores Germany's attractiveness for international companies within the European Union."

“We are pleased to be taking a major step forward in semiconductor production in Europe and Germany,” said Christin Eisenschmid, Intel’s vice chairman and general manager for Germany. “Our collaboration with Germany Trade & Invest played a decisive role in the entire decision-making process: together we have completed this huge project and laid a solid foundation for Europe to solve the global chip shortage. We appreciate the fruitful dialogue and look forward to our major expansion in Germany.”

Supply chain shortages highlight the importance of self-production of key goods. This is an issue that EU member states have been emphasizing to address. In 2021, the EU agreed to a €145 billion "European Processor and Semiconductor Technology Initiative."

Magdeburg, a city in eastern Germany, offers moderate real estate prices and easy access to Germany's two largest cities, Berlin and Hamburg. But that's not the only selling point.

" Why did Intel invest in Germany? " commented Max Milbredt, an expert at Germany Trade & Invest. "It was mainly because of the talent and good management we had. We also had the right amount of land, because it was a huge investment. Financial incentives were also very important for the semiconductor industry to be able to realize this large-scale infrastructure project. All of these factors combined to make this result possible."

The size of the European market is another major positive factor for Intel's landmark investment in the European heartland.

The Semiconductor Industry Association (SIA), based in the United States, estimates that the industry's global sales will be about $556 billion in 2021. The European Semiconductor Industry Association (ESIA) says European sales will be about $48 billion. The industry grew 25% year-on-year globally. The World Semiconductor Trade Statistics (WSTS) expects the industry to grow 8.8% this year.