Intel increases investment in German wafer manufacturing site to $33 billion

Key Points

Intel nearly doubled spending for two factories in Germany to around $33 billion.
The German government has reportedly increased its incentive program.
The decision is part of plans to #39;Intel to expand operations in Europe.

Intel (INTC) has nearly doubled its investment in its planned “state-of-the-art” wafer fabs in Magdeburg, Germany.

The chipmaker has signed a revised letter of intent with the German government to spend 30 billion euros ($33 billion) on the site it calls “Silicon Junction.” It initially planned to invest 17 billion euros ($18.6 billion). Germany has reportedly agreed to increase its business incentive program from 6.8 billion euros ($7.4 billion) to 10 billion; euros ($10.9 billion).

Intel said Silicon Junction, which will encompass two semiconductor manufacturing facilities, is expected to enter production “at a more advanced technology” than expected, and be the first of its kind in Europe.

Intel bought the site of Magdeburg in November and plans to begin operations in 2027. The move is part of the company's European expansion efforts, which include investments in factories in France, Ireland, Italy, Poland and in Spain.

CEO Pat Gelsinger said building Silicon Junction was “a critical part of our growth strategy for Intel”. German Chancellor Olaf Scholz called the deal a “milestone” for Germany as a high-tech production site and the biggest foreign direct investment in the country's history. .

Intel shares fell by 3.7% in early trading on Tuesday after hitting a 2023 high on Friday.