German Government Touts $14.7bn State Aid For Chip Factories

Germany is looking to attract chip makers to build more factories in the country, shortly after Intel chose the country for its new fab.

Reuters reported Economy Minister Robert Habeck as saying on Thursday, that the German government wants to attract chip makers with 14 billion euros ($14.71 billion) in support.

Habeck reportedly added that the lack of semiconductors used in everything from smartphones to cars was a massive problem.

State Aid

“It’s a lot of money,” Habeck was quoted as telling a gathering of family businesses in Hanover.

It comes after the European Commission proposed plans for new legislation to ease state aid rules for chip factories, in order to encourage chip manufacturing in the European Union.

It came after the EC plan was first announced by Ursula von der Leyen in September 2021, when the global chip shortage showed no sign of easing.

The proposal, known as the ‘European Chips Act’, is touted as a way to bolster Europe’s self sufficiency in the semiconductor sector, by easing state aid rules, improving tools to anticipate shortages and crisis, and strengthen research capacity in the bloc.

The EU has been seeking ways to establish more chip factories within its borders.

In March 2021 the European Union under its 2030 Digital Compass plan had announced it wanted to produce at least 20 percent of the world’s cutting-edge semiconductors by the end of the decade.

Intel factory

And the EU has already seen some success.

In mid March this year, Intel finally confirmed the worst kept secret in the tech industry, with the news it would build a chip factory in Magdeburg, Germany.

Intel said it would invest an initial 17 billion euros into a leading-edge semiconductor fab mega-site in Magdeburg, and will also create a new R&D and design hub in France.

German government sources said at the time the state was promoting the project with billions of euros of funds.

In addition to all this, Intel will invest in R&D, manufacturing and foundry services in Ireland, Italy, Poland and Spain.

In September 2021 CEO Pat Gelsinger said Intel could potentially invest as much as 80 billion euros ($95bn or £69bn) to expand chip production in Europe.

But months before that, Pat Gelsinger in March 2021 stated Intel was seeking 8 billion euros (£7bn) in public subsidies for its planned semiconductor plant in Europe.

Germany’s Habeck meanwhile was quoted by Reuters as saying there would be further examples like Magdeburg even though companies in Germany would remain dependent on producers elsewhere for components like batteries.

“We must develop our own strategy to secure primary materials,” he reportedly said.