“We’ve Found the Perfect Location in Germany”

In March, Intel announced it would be building a billion-euro new microchip production facility in the eastern German city of Magdeburg. Intel Germany’s managing director Christin Eisenschmid tells Markets Germany how this record foreign direct investment came about.

July 2022

How much of this expansion is targeted at the sizeable German market? And how much of what Intel will make in Magdeburg will be exported?

Christin Eisenschmid: With our expansion and investment plans we are targeting the entire European market and beyond – Germany is key to our strategy. We plan to invest EUR 17 billion to build two cutting-edge fabs in Magdeburg with ambitious plans for expansion. Our long-term goal is to construct a so-called “mega fab” in Magdeburg, consisting of up to eight connected factories. At our new site in Saxony-Anhalt, we plan to produce cutting-edge chips that will play a crucial role in the digital transformation of Europe. With our Intel Foundry Services, we are also opening our fab doors to serve the needs of foundry customers.Intel’s investment plans in Germany are an important step in our pan-European strategy for a cutting-edge semiconductor development and manufacturing ecosystem fully integrated into the current European landscape. Expanding advanced semiconductor capabilities today offers Europe a great chance to reduce its dependency on imports from Asia and can help it achieve its digital sovereignty ambitions.

Why did Intel select Germany? Its highly skilled workforce and central geographical location in Europe were clearly strong influencing factors, but what were some of the other reasons?

CE: These are definitely important factors, but Germany has much more to offer. Germany is the largest national economy in Europe. It is also the fourth largest economy and the third largest exporter of goods worldwide. Its main tech fields include automotive, digitalized industry, cloud computing and security. The country offers an unparalleled ecosystem of SMEs, suppliers and customers, and it houses significant leading companies with global impact. Germany also is home to world-class research centers like the Max Planck Institute and the Fraunhofer organization. The combination of all these critical factors makes Germany the ideal hub for Intel’s European investment plans. In Magdeburg, we’ve found the perfect location in Germany. The city provides the necessary infrastructure and space to build the fab. Moreover, it boasts close proximity to key major cities and seven universities, so it gives us access to highly skilled talent as well as customers from different industries.

Christin Eisenschmid, managing director Intel Germany © Intel

In one interview, Intel CEO Pat Gelsinger praised the work of German state authorities, who sometimes have a reputation for being cumbersome. What was positive about your interactions with them?

CE: So far, we have had excellent cooperation with authorities both at the European and the national level. The EU and the member state governments we have worked with have shown themselves to be excellent partners for businesses and to have bold ambitions to push forward European semiconductor production. Input from government partners and established regulations, like those in Germany, provide certainty and a framework for our operations. In alignment with the shared vision of the German government and European plans to achieve greater semiconductor leadership, we took this decisive step together to develop a European answer for the global chip demand.

Can you give us some insight into Intel’s decision-making process? How long did it take? And what are the most important factors that can influence such a process?

CE: For the past year, we have been scouting locations in Europe. Our site selection process includes evaluating many different aspects, including talent, infrastructure, financials, supply chains, natural disaster risks, legal, and others. Environmental factors play a key role, too. For example, a fab cannot be built too close to major railroads or airports due to the vibrations they cause. We had productive conversations with leaders from several EU member states and regional officials, but ultimately the site in Magdeburg scored the highest across the evaluation process and offered the best combination of attributes to meet our needs. In addition, the full backing of local, regional state and national officials plus the positive attitude conveyed by the citizens was a catalyst for selecting Magdeburg.

What are the next steps and milestones in your expansion? What challenges do Intel and the city of Magdeburg face?

CE: The next step following the official announcement is that we will go straight into planning. During the whole process, Intel is committed to engaging in a dialogue with the local communities involved. We are certain that a commitment to openness, transparency and benefits for the local communities will convince the public of our endeavor. In the first half of 2023, we want to begin with the construction phase on an area spanning roughly 450 hectares – a size of 600 soccer fields. Our production start is planned for 2027 and will focus on cutting-edge semiconductors, providing a boost to industrial transformation in Europe. Of course, this timeline is subject to European Commission state aid approval and funding approval by the German authorities.

A 3D rendering of the high-tech processor factory complex that US computer chip giant Intel is building in Magdeburg in early 2023, at a cost of EUR 17 billion. © Intel

What role did GTAI play in your decision?

CE: Our cooperation with Germany Trade & Invest has played a decisive role during the entire decision process, and we are very thankful for the productive dialogue. With GTAI as a strong partner, we were able to identify possible locations and finally select Magdeburg as the location for our expansion. Together, we were able to get this huge project off the ground and lay the foundation for more stable supply chains and a strong European answer to the global chip shortage.

How important was the active support of the German national government and the regional government of Saxony-Anhalt? And why is gaining political support so vital generally?

CE: The support of the regional and the national government is critical to realizing such a huge project. As a US company in Germany, it’s important that everyone is behind the project. We were very happy to see that Saxony-Anhalt and State Premier Reiner Haseloff made it a top priority and set a lot in motion in a short time. Everyone – the city of Magdeburg, the state of Saxony-Anhalt, and the German national government – had a common goal and enabled an open and solution-oriented collaboration. The construction of one of Europe’s most modern factories will help Europe’s supply chains to become resilient and less dependent on Asian imports. We are proud to do our part to advance Europe’s position in the semiconductor sector.