Intel: Chip Factory in Magdeburg Threatened Due to Constitutional Court Ruling?

Last Updated: 23. November 2023By

The financial tremor was and is immense, and the consequences are still far from foreseeable: The ruling of the Federal Constitutional Court declaring the 60 billion euro Climate and Transformation Fund unconstitutional and effectively cancelling it has far-reaching implications.

The funds, which were originally intended to cope with the pandemic and were subsequently reallocated by the federal government, were to support numerous projects and investments that would help industry in particular to act as climate-neutral as possible in the future.

Intel had renegotiated additional billions in federal funds A prestigious project announced with much pride in East Germany just a few months ago is now on the brink: Intel plans to build a new chip factory in Magdeburg. A total investment of around 30 billion euros is planned for this, of which almost 10 billion euros were to be shouldered by the federal government.

But part of that is now on the brink after the ruling from Karlsruhe: While 7 billion euros are firmly planned and written into the regular federal budget, almost 3 billion euros were to come from the now blocked Climate and Transformation Fund. Intel had secured these additional billions as part of renegotiations in the summer. There are no firm contracts for the construction of the factory yet, only declarations of intent.

East Germany fears for its prestige projects Around 3,000 jobs were to be created by the new chip factory in the capital of Saxony-Anhalt. In addition, the world-famous corporation was to shine a light on the location and promote the settlement of international technology companies in Germany.

In particular, enormous projects are planned in East Germany: After the Tesla factory in Brandenburg’s Grünheide, where new cars have been rolling off the assembly line for the European market for some time, Intel was to come to Magdeburg and a microchip factory of the Taiwanese manufacturer TSMC was planned for Dresden. The catch: The TSMC project in Dresden was also to be funded by the federal government – with funds exclusively from the Climate and Transformation Fund.

Are chip factories in Magdeburg and Dresden on the brink? So are both production plants now on the brink? The state government does not want to hear of this worst-case scenario yet. Several cabinet members from Saxony-Anhalt, which has been ruled by CDU Prime Minister Reiner Haseloff since 2011, expressed themselves accordingly. They are counting on solutions to be found at the federal level to save the projects.

Otherwise, not only thousands of potential jobs would be lost, the image of Germany as an attractive business location would also be severely compromised should Intel withdraw from the project. The chip factory of the US manufacturer is „indispensable“ for Magdeburg and Saxony-Anhalt, according to the state government.

High image risk for business location Germany The investments, especially in eastern German locations, are intended to make regions more attractive to young people again, who have been struggling with population decline and aging since the reunification: Many young people move to western federal states, foreign specialists avoid the east for fear of racist attacks.

Should the ruling from Karlsruhe ultimately lead to Intel and TSMC abandoning their investment plans and settling in other countries instead, this would have far-reaching consequences for Germany as a business location.

Intel is still silent on the matter.