Intel is committed to Germany chip plant, working with government -exec

By Jane Lanhee Lee and Hakan Ersen

HALF MOON BAY, Calif/FRANKFURT (Reuters) - U.S. chip giant Intel Corp is committed to building its chip fabrication plant, or fab, in Magdeburg, Germany and is working out funding details with the government, according to Chief Global Operations Officer Keyvan Esfarjani.

“We are committed to making the Magdeburg project successful,” Esfarjani told Reuters on the sidelines of Industry Strategy Symposium, a chip conference by Semi last week in Half Moon Bay, California. “While we have to pace ourselves in this current environment, we can’t take our eye off the ball.”

The comments come after regional newspaper Volksstimme reported last month that Intel has backed away from its original target of starting chip factory construction in the eastern German city in the first half of 2023, saying the semiconductor giant wanted more public subsidies.

When asked about Intel's investment, Germany's economy ministry's spokesperson told Reuters the government was in "constant exchange with Intel and the European Commission" about the project. "The type and (maximum possible) amount of funding depends on approval by the EU Commission - and for this, clear benchmarks and data on the company's project are needed."

The newspaper report said inflation was increasing costs. Esfarjani declined to comment on that but said, since the announcement, “geopolitical challenges have become greater, semiconductor demand has declined and inflation and recession are disrupting the global economy.”

He pointed out that Intel already purchased the land where the fab will be built late last year.

In March Intel announced Magdeburg as the site for its new mega chip manufacturing complex, a key part of its $88 billion investment drive across Europe.

Governments in Europe are still jockeying for Intel's investments. Last week Italy's government also reiterated that it was determined to secure and investment by Intel.

(Reporting By Jane Lanhee Lee in Oakland, Calif, and Hakan Ersen in Frankfurt; Editing by Josie Kao)