The planned chip factory of the US company Intel near Magdeburg in a computer animation. intel
Intel wants to build two chip factories in Magdeburg for 30 billion euros. The German state bears a third of the costs with record subsidies of ten billion euros.
Strategic reasons speak in favor of the aid. Germany and Europe want to become less dependent on China and Taiwan for semiconductors.
The price for this is high, and ten billion is a sum that is difficult to imagine. We calculate how many schools, apartments, bike paths or direct aid to citizens the state could pay for with it.
It is the largest investment by a foreign company in Germany to date – and at the same time the largest case of subsidies. The US company Intel wants to build two factories for computer chips in Magdeburg for 30 billion euros. The German state bears a third of the costs and supports the construction with 9.9 billion euros. In addition, Intel receives a low electricity price.
Construction is scheduled to begin around the turn of the year, with production beginning in 2027 at the earliest. The Intel settlement is economically significant for Magdeburg and Saxony-Anhalt. Intel promises 10,000 jobs, 3,000 directly in the works, 7,000 at suppliers in a new business park. Mathematically, the state would support each job with one million euros. The dimension shows that there must be more behind it.
It’s about strategy. Europe and Germany want to become more independent of China and Taiwan when it comes to the key product semiconductors. Europe’s share in the production of the chips required here is only ten percent. Intel CEO Pat Gelsinger told us in an interview: “For the past 50 years, geopolitics has been determined by oil reserves. Today, the supply chains for semiconductors are more concentrated than oil reserves have ever been.” Here, too, there is said to be a “turning point”.
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Intel boss Pat Gelsinger explains in an exclusive interview which strategy the chip manufacturer is pursuing in Europe – and with which company bosses he is speaking
Economics Minister Robert Habeck names the goal of creating a “biotope” for semiconductor production in Europe and argues: “To be honest, only Germany can do that because we still have the financial means. And Germany should do the same.”
Two comparisons make it clear how gigantic the project is: The electric car manufacturer Tesla is investing around six billion euros in Berlin with subsidies of one billion. According to its subsidy report Almost 21 billion euros in aid paid in 2022. For Intel, that’s another half for just one company.
The importance of Intel’s investment is not disputed, but the amount of the aid is. “We throw the money out the window,” says Reint Gropp, head of the Halle Institute for Economic Research. It would be better to use it to promote research and development in universities and companies. Here are a few more examples of what the state could also pay for with ten billion euros.
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The turning point in Initiate housing construction:
The subsidies for Intel are about twice as high as the entire budget of building minister Klara Gleywitz. The federal government will spend 14.5 billion euros by 2026 on the construction of social housing. Gleywitz is also launching a program to boost the weak housing construction. All in all, federal funding for new construction amounts to 1.1 billion euros a year. Experts criticize that ten billion euros would be needed for a turnaround in housing construction.
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hundreds schools build or modernize
There is a double investment backlog in the school system. For one thing, new schools have to be built. There are also no sports halls and swimming pools. If you calculate around 25 to 50 million euros for a new school, 200 to 400 new schools could be built with the Intel billions.
On the other hand, existing schools have to be renovated, renovated or modernized. The KfW development bank sees a need of 45 billion euros to bring the schools up to date. Ten billion euros are needed for this in North Rhine-Westphalia alone.
Build 250 to 700 kilometers of new railway line
A kilometer of track costs around 10 to 20 million euros for conventional lines and 30 to 50 million euros for high-speed lines. If you calculate with the mean values, 666 kilometers of normal rails or 250 kilometers of new high-speed lines could be built with the ten billion Intel.
Build thousands of kilometers of new cycle paths
A kilometer of cycle path costs between 200,000 and 500,000 euros on average. So 20,000 to 50,000 kilometers of new cycle paths could be built or designated and specially marked. The difference would be huge. The existing network of cycle paths on federal, state and district roads will be expanded 50.000 Kilometer estimated.
quarrel about the Enclose basic child security
The federal government is currently struggling over the budget for 2024. One point of contention is the introduction of a Basic child security. It is intended to bundle the previous child benefit and services for families in need – and also expand the latter. The additional costs amount to 12 billion euros. There is currently no space for this in the budget.
And an unconditional basic income?
A popular demand is to replace some social benefits such as unemployment benefits with an unconditional basic income. However, the additional costs for this are estimated at around 800 billion euros. So the Intel subsidies wouldn’t make a significant difference here. The state could also distribute them to all people. Approximately live in Germany at the moment 84.4 million people, 72 million of whom have German citizenship. The state could pay every German in Germany a one-time bonus of 140 euros – or reduce per capita debt by almost 140 euros.
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Depending on how you look at it, the record aids for Intel are no longer as powerful. The subsidy critic, IWH boss Gropp, also put your size into perspective. Around the world, new factories for semiconductors are currently being subsidized with around 700 billion euros in subsidies.