It is make or break for Intel’s giant bet on Germany
RARELY DO GERMANY’S top economists see eye to eye on a big economic-policy controversy. But when it comes to the government’s decision to spend billions on subsidies for Intel’s mega semiconductor factory in Magdeburg, Reint Gropp of the Halle Institute for Economic Research, Marcel Fratzscher of the German Institute for Economic Research and Clemens Fuest of the Ifo Institute all agree. They consider lavishing billions on the American firm a spectacular waste of taxpayers’ money.
The wonks’ consensus is falling on deaf ears. Olaf Scholz’s centre-left coalition government has agreed to prop up Intel’s mega-site in Magdeburg to the tune of €6.8bn ($7.4bn), a big chunk of Intel’s €17bn investment in the east German town. Christian Lindner, Germany’s pro-market finance minister, recently said there was no money in the budget to meet Intel’s demands for an extra €3bn or so in state aid to close a “cost gap” caused by the higher prices of energy and construction. Yet the Social Democratic chancellor appears open to loosening the purse-strings, provided that Intel expands its project.
Pat Gelsinger, Intel’s boss, is touring Europe in mid-June. According to sources close to the government, he is expected to meet Mr Scholz in Berlin on June 19th to make his case. The talks could seal the fate of the giant endeavour, which would be the biggest foreign direct investment in German history. He will also visit Magdeburg, where 30 Intel employees, including Bernd Holthaus, head of personnel in Germany, are already beavering away.
2023-06-15 08:20:25
Source from www.economist.com
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