The semiconductor industry has been hit by quite a tremor in the past few years. Silicon and chip shortages combined with a global pandemic have taken a heavy toll. Despite this turmoil (open in new tab), it still looks safe for Taiwan to dominate the industry in manufacturing, but uncertainty is seeing other countries trying to jump into the mix.

The U.S. is one of the countries desperate to join the ranks, with its CHIPs Act allowing new factories to be built and even enforcing sanctions against China. (opens in new tab) The new state-of-the-art foundry being built in Germany (opens in new tab) is going to be much more expensive than originally planned, but another place that is seeing a big boost to this industry is Europe (opens in new tab).

In early 2022, Intel announced that it will build a new chip manufacturing plant in Magdeburg, Germany. The construction cost of this state-of-the-art foundry was a whopping 17 billion euros, with about 7 billion euros to be funded by government money. Now, according to Reuters (opens in new tab), government sources say Intel wants to raise the government contribution to more than 10 billion euros to complete the job.

Neither Intel nor the German government have yet confirmed this figure, so we cannot be sure. Nevertheless, an Intel spokesperson said the company is working with the government to "close a significant cost gap." Whether that is 3 billion euros remains to be seen.

Intel cites rising energy costs as a reason why fabs need more money. Intel also talks about the use of more advanced manufacturing techniques that could raise costs significantly; when TSMC ramped up its new North American fab from 4nm production to 3nm production (open in new tab), the company was similarly tight-lipped about the funds needed to do so.

We don't know exactly what Intel's new German foundry will be set up for, but given that it is set to see 2nm production in 2026 (open in new tab), the company may be looking to that future. However, Intel's CEO has previously stated that the chip shortage will continue through 2024. If so, it is likely that fabs will be able to accommodate chips of various sizes. It would be surprising, but cool, if Intel has already established a pure 2nm fab. If so, we won't see any working devices from this fab for years to come.