There will be no large modern chip factory from Intel in Magdeburg, Germany, and a billion-dollar investment in an assembly site in Poland is also off the table. This marks a reversal for Intel and ends a saga that has dragged on for years.
Intel withdraws from planned billion-dollar investments in Europe. In a memo to his staff, CEO Lip-Bu Tan states that the company no longer intends to support the major projects in Germany and Poland.
This is a setback for both countries and the EU as a whole. Intel’s investments were part of the European ambition to build more strategic independence in chip production on the continent.
Farewell Intel Magdeburg
The largest project was in Magdeburg, Germany. There, Intel wanted to set up a massive factory for the production of the most advanced microchips. Germany was able to convince Intel with the promise of a ten billion dollar subsidy. The total cost of the site would certainly amount to double that.
The entire plan has faced setback after setback. In 2022, Magdeburg won out over other proposals, including one from Belgium. Not long after, the economic climate changed. The price of building materials skyrocketed, and Intel itself increasingly struggled with competition.
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There were also practical objections. The planned site was found to be on fertile ground, and German law requires that it be excavated and preserved. Construction was expected to start this year.
Poland and Ohio
Tan is now drawing a line through that as well. Poland is also affected. There, Intel wanted to invest 4.6 billion euros in a factory that would convert wafers into individual chips, which would also be tested and packaged there. The site would neatly complement the one in Magdeburg. This plan is also off the table.
Intel already has an R presence in Poland. The new factory was supposed to be in addition to that. There are currently no indications that the R department is under discussion.
Tan is not only wielding the axe in Europe. In the U.S. state of Ohio, Intel also planned large investments, which are now at least significantly delayed. However, the delay seems less final than the situation in Europe.
Finally, the workforce is not spared. In addition to previously announced layoffs, more people have to leave. By the end of this year, the core workforce of the chip specialist must not exceed 75,000. At the end of 2024, there were still 109,800 people on the payroll, of which 99,500 were designated as core employees.
Rescue Operation
Lip-Bu Tan is shaking up Intel significantly. He succeeded Pat Gelsinger in March and is taking more drastic measures than his predecessor. However, Tan has the same mission as Gelsinger: to save Intel after it failed to capitalize on various innovations, such as mobile and AI. Moreover, the chip manufacturer lost its technological leadership in manufacturing to TSMC, and the ARM architecture emerged as a worthy competitor to x86.
A far-reaching streamlining of the company seems to be an important step in the reinvention of Intel. Tan wants to further focus on the company’s core activities and only invest where there is demand. Expansion in the EU does not seem to fit into that vision.