Intel Cancels Massive German Chip Factory to Cut Costs

Intel has decided to cancel its plans for a very large chip-making factory in Germany and a packaging plant in Poland. The company will also move some of its assembly and testing work from Costa Rica to bigger facilities in Vietnam and Malaysia. These changes are part of a plan to save money and make Intel more careful about how it spends.

The news came from a letter from the new CEO, Lip-Bu Tan. He explained that Intel wants to grow its factory network in a way that matches what customers need while being smart about expenses. Because of this, Intel will not continue with the projects in Germany and Poland. Although the Costa Rica site will lose some work, it will still be an important place for engineering and other jobs.

The factory in Magdeburg, Germany, was planned to be a big deal for both the local area and the European Union. Local governments and the EU promised billions of euros to support it, and it was meant to help Europe grow its chip industry. However, Intel said the government money was not enough and asked for more, which the German government refused.

Construction also faced big problems. Scientists found ancient burial sites under the land, making building difficult. The soil was also too soft and rich in organic material, so it would not support the huge and heavy building needed for modern chip equipment. These issues caused long delays.

Without these new factories, Intel’s main manufacturing presence in Europe stays in Ireland. Intel is also slowing down work on new factories in the United States, such as in Ohio, as it tries to save even more money. The company is also reducing staff from about 125,300 people in mid 2024 to about 75,000 by the end of the year, a very large cut.

Intel has had trouble making more money than it spends in recent years, while competitors like Nvidia have grown quickly with fewer employees. The new CEO wants to change Intel’s direction and get spending under control. However, it is not clear yet what Intel will look like in the future as it tries to recover and grow stronger.

Original article and image: https://www.pcgamer.com/hardware/processors/intels-german-megafab-dream-is-over-ceo-lip-bu-tan-kills-the-project-beset-with-setbacks-from-eu-funding-to-ancient-neolithic-remains-to-save-cash/