Intel Asks For More Subsidies For ~2nm Chip Plant In Germany As Costs Soar

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Chipmaker Intel Corporation's plans to build a new manufacturing plant in Germany are facing the brunt of historic inflation as the firm's spending estimates for the facility have nearly doubled, according to a fresh report from Bloomberg. The firm is currently undertaking an aggressive capacity expansion plan when the personal computing industry is facing a historic downturn as demand slumps in a tough macroeconomic environment and channel inventory remains elevated due to aggressive ordering in the wake of the coronavirus pandemic.

Intel's decision to build a new chip manufacturing facility in Germany was welcomed by authorities since it came when car manufacturers faced a chip shortage. This was due to the car companies canceling their orders as demand slumped during the coronavirus pandemic, only to be caught off guard as it recovered due to China's rapid reopening.

The troubles were exacerbated by the fact that most of the world's chips are manufactured by the Taiwan Semiconductor Manufacturing Company (TSMC), which had to cater to the sudden increase in automotive demand by running its factories at higher capacity levels than it typically does as part of a process called a Super Hot Production Run.

However, the plans to build a new plant in Magdeburg, Germany, seem to have hit a snag since soaring inflation in Europe in the aftermath of the Russian invasion of Ukraine has driven up energy prices and increased the cost of construction materials. This has made Intel ask for more subsidies from the German government, as its cost estimates for the plant soar to €30 billion from an