Intel’s Plans Cancelled Just in Time

Chip manufacturer Intel announced the end of its plans to invest in a chip factory in Magdeburg. Irene Bertschek, head of ZEW’s “Digital Economy” Research Unit and Professor of Economics of Digitalisation at Justus Liebig University Giessen, has commented on the matter:

“The establishment of Intel in Magdeburg was controversial from the outset. On the one hand, it was seen as an investment in the future. On the other hand, the sum of nearly ten billion euros promised by the former German government as state aid was immensely high.

As a factory for the production of microchips for AI applications, the plant would have ensured direct access to these important products for the German economy. This would have supported the transformation of various sectors, helping them to become less dependent on the USA and China.

However, the microchip market is an area where Intel is currently not competitive; the company now has to restructure. Therefore, they have cancelled just in time. It would have been worse if the ten billion euros had already been paid out. If such relocations of foreign companies are supported by taxpayers' money, these funds should definitely be invested in long-term projects in the interests of regional development, for example in research and education infrastructure that can also be used by other firms and institutions and is not wasted if the subsidised company goes bankrupt or moves on.”