ASTANA, Sept 17 (Askume) – German Chancellor Olaf Scholz said on Tuesday that Intel Corp (INTC.O) is committed to plans to build a factory in eastern Germany, despite warnings that the U.S. chipmaker would delay construction as part of its plan to build the factory by two years.
“The decision to postpone the German project for two years also reflected the intention to persevere,” Scholz said in Astana.
“It is important for us to take advantage of this opportunity in a very volatile sector of the semiconductor industry and help ensure that Germany’s already deep production capacity is further expanded,” he said.
Intel CEO Pat Gelsinger on Monday issued a memo to employees outlining a series of steps the company will take, including a two -year pause in construction on the Magdeburg project .
“This is now a purely commercial decision and has to do with corporate policy,” German Economy Minister Robert Habeck said on Tuesday. He said Germany was committed to establishing semiconductor production in Europe.
“Intel now needs to get back on a path conducive to investment as quickly as possible,” Habeck’s department said in a statement.
Intel’s decision also sparked a budget dispute within Germany’s ruling coalition, with the finance ministry saying the money now needed to subsidize Intel should not be used to balance accounts and the economy ministry backing down.
Commenting on the controversy on Tuesday, Scholz said his coalition government would now discuss together “how we use the unspent money wisely and prudently.”
Economists say the unused money should be used for tax reform.
Moritz Schularick of the IfW economic institute told Askume: “From a macroeconomic point of view, in the current circumstances it makes sense to use these funds for additional investment or investment incentives, such as through tax credits.
“This money could be better invested as the basis for an investor-friendly tax reform that would benefit all companies, including those not subject to brief political attention,” said Friedrich Heinemann of the ZEW Center for Economic Research.
