The construction of an Intel chip factory in Germany failed
Hardware

The construction of an Intel chip factory in Germany failed due to a lack of personnel and expensive electricity

Intel has taken four to five years to build the first phase of its production complex in Magdeburg, Germany, but the significant investments (up to 30 billion euros) and long waiting times will have to be compensated for by the introduction of advanced lithography. The implementation of the project is now being made more difficult by many Europe- and Germany-specific problems.

    Image source: Intel

Image source: Intel

In particular, as already mentioned The Wall Street Journal, it could be a challenge for Intel to find enough qualified employees for new ventures in Germany. The local universities in the Magdeburg area with fewer than 240,000 inhabitants are rather slow to engage in training personnel for the semiconductor industry. Intel will be forced to send future employees completing a three-year training program to companies in Ireland where they will undergo training in the final year of their training.

The first company in the complex under construction was originally scheduled to go into operation in 2027, but in total Intel needs around 3,000 qualified employees to work on it permanently. So far, local universities have started training only 20 specialists and plan to later increase the number of the group tenfold. The surrounding universities are thinking about the need to attract qualified teaching staff. To set up a training laboratory, an on-site internship would require around 30 million euros. However, if Intel provides additional funding for training purposes, the size of the lab could be increased slightly.

After the unification of the two parts of Germany in 1990, a significant part of Magdeburg’s industrial potential was lost, and now the city is inferior in level of development to the same as Berlin and Munich. There are few English-speaking residents here, and of the current students only two are pursuing semiconductor training. Nationalist sentiments are quite strong in the local political environment, and this could become a problem for Intel as the company will need to recruit 30 to 40% of the future company’s employees from abroad.

The high cost of energy resources also complicates the economic viability of the future company. Production sites of similar size in other regions of the world consume up to 300 million kWh every quarter. In the second half of last year, the cost of 1 kWh in Germany reached 19 cents, exceeding the level of France and Poland by 40%. Local authorities are trying to allay Intel’s concerns about this issue by proposing to build a separate power plant that would generate energy from wind. However, so far no concrete plans have been implemented from this idea. The government is also considering the possibility of subsidizing electricity costs for large industrial companies, but some economists oppose such measures. In addition, around 10 billion euros have already been made available for the development of Intel companies.

The Magdeburg city administration is convinced that investments in infrastructure benefit all residents and not just Intel. The attempt to restart industrial production across Germany will be costly but likely to pay off in the long term, local officials say.

About the author

Dylan Harris

Dylan Harris is fascinated by tests and reviews of computer hardware.

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