US chip manufacturer Intel has abandoned plans to build a factory in the eastern German city of Magdeburg as it battles with heavy losses and job cuts domestically and fresh competition abroad.
After announcing a $2.9-billion (€2.5-billion) second-quarter loss on Thursday, the California-based tech giant confirmed that it would “not be pursuing planned projects in Germany and Poland.”
The initial plans had involved the construction of a €30-billion chip production plant in Magdeburg, to be subsidized by the German government to the tune of around €10 billion. However, the plans were put on ice in November, with no specific reason given.
“When you look at the last few months, then Intel’s decision isn’t that surprising,” Sven Schulze (CDU), Economy Minister for the eastern German state of Saxony-Anhalt, told local public broadcaster MDR.
Citing Intel’s internal problems and US President Donald Trump’s “America first” policy, he said: “Both were bad signs for Intel investment in Europe.”
Germany’s biggest trade union, IG Metall, said the U-turn was “without doubt a set-back” for the region and called for “new perspectives.”
Regional union boss Thorsten Gröger said that Saxony-Anhalt had developed all the infrastructural prerequisites for industrial investments in recent years, “from available spaces to transport connections to qualified personnel.”
He warned Berlin not to abandon the region’s industrial ambitions and ensure that “the political will remains to maintain manufacturing in the country and actively support new investments.”
Meanwhile, Schulze insisted that the negotiations with Intel had at least given Saxony-Anhalt international recognition which could pay off in future.
For the time being, he referred to the decision last week by nearby Dresden chip manufacturer FMC to build a factory in Magdeburg, which he said was an important Plan B.
