Intel's German megafab dream is over: CEO Lip-Bu Tan kills the venture, beset with setbacks from EU funding to historical neolithic stays, to avoid wasting money
Intel has cancelled plans for a so-called megafab in Germany and a packaging plant in Poland. It additionally plans to shift meeting and check amenities in Costa Rica to its bigger Malaysian and Vietnamese websites. The information comes from a letter to staff written by CEO Lip-Bu Tan, who says the transfer will assist Intel in its aim of turning into a “extra financially disciplined firm” because it seems to be to chop prices company-wide.
“Going ahead, we’ll comply with a scientific method to rising our manufacturing unit footprint that’s totally aligned with the wants of our prospects. We shall be even handed and disciplined as we allocate capital – as a result of that’s what nice foundries do,” says CEO Lip-Bu Tan.
“With that in thoughts, we’ve got determined to not transfer ahead with beforehand deliberate initiatives in Germany and Poland. We additionally plan to consolidate our meeting and check operations in Costa Rica to our bigger websites in Vietnam and Malaysia. Costa Rica stays a big and vital Intel website that’s house to key engineering groups and company features.”
The cancellation of Intel’s megafab in Magdeburg, Germany shall be an enormous loss for not simply the native space, which was set to see tens of billions of euros invested into the world to construct the superior manufacturing amenities, generally known as fabs, but in addition the EU. Introduced in 2022, the Magdeburg website was deliberate with hopes of turning into a world-leader in semiconductor manufacturing, delivering chips on course of nodes within the ‘Angstrom period’, and aiding the EU in doubling its semiconductor market share by 2030.
The European Fee and native governments have been set to take a position billions of euros within the facility, although even one yr later, Intel deemed the cash not sufficient and requested for extra. To which the German authorities mentioned no.
That is not the final of Intel’s points, both. The fab was beset with points as a result of very floor it was deliberate to be constructed on. Archaeologists from the State Workplace for Heritage Administration and Archaeology Saxony-Anhalt discovered a number of burial mounds beneath the soil, which dated again to the neolithic interval, making them round 6,000 years previous. Then, Intel discovered that the soil on the location was richer in natural matter than anticipated, which is simply too mushy for large buildings to take a seat atop of and not using a deeper resolution.
This can be a large downside for large fabs, that are made utilizing tremendously giant and heavy metallic shells, as they can’t have conventional helps all through the constructing as a result of the usage of giant lithographic methods. EUV methods, which might must be used to provide chips within the Angstrom period, are extraordinarily giant, and the Excessive NA EUV machines that Intel is hoping would be the key to future course of nodes are completely ginormous.
This all led to the postponement of its German megafab plans in September 2024 by then-CEO Pat Gelsinger, who had beforehand championed the reason for in-house manufacturing and foundry providers at Intel.
The corporate’s new CEO, Lip-Bu Tan, seems much less captivated with Intel’s manufacturing arm altogether, admitting the corporate might cease producing new cutting-edge course of nodes with out securing a big buyer for its foundry providers, which suggests producing chips for one more firm. At present, Intel would not have a kind of, and even produces most of the tiles utilized in its personal chips in rival foundry TSMC’s fabs.
With the lack of the German megafab and packaging plant in Poland, Intel’s manufacturing footprint in Europe is concentrated largely on places in Eire alone. It additionally plans to shake up its world footprint, transferring meeting and check amenities in Costa Rica to its bigger amenities in Asia, just like the one we have visited in Malaysia.
It is a bit of outdated now, however for a tough concept of the unfold of fab amenities globally, try this map we have put collectively beneath.
Even within the US, the place there is a push for extra home manufacturing, particularly in semiconductors, by consecutive governments, Intel is ramping down development. Lip-Bu Tan has mentioned it’s slowing development on fabs in Ohio, which had already seen a delay to 2030 or past.
Intel is clearly struggling to justify its huge spending at this second in time. The corporate can be within the means of slicing employees to round 75,000 staff by the yr’s finish, which looks like rather a lot, however is a 15% discount in employees. The corporate had already lower employees over previous years, nevertheless. It had round 125,300 staff in June, 2024, which decreased to 102,600 by March 2025. That places the cuts to 75,000 into perspective a bit of.
It is an apples-to-oranges comparability however Nvidia has someplace round 36,000 staff as of 2025. Intel has manufacturing amenities, which Nvidia doesn’t, however some shall be questioning why Nvidia is likely one of the richest firms on the planet whereas working with much less sources, whereas Intel is struggling to earn more money than it spends with extra. Intel’s working earnings was a lack of $3.1 billion in Q2, 2025, a rise from this similar time final yr.
All of which doesn’t paint a contented image for Intel. The corporate’s new CEO is decided to chop prices and switch its fortunes round, however whether or not it seems to be the identical as the corporate we have come to know over the previous few many years within the course of, solely time will inform.
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