Written by Frederik Heine and Subanta Mukherjee
BERLIN/STOCKHOLM (Reuters) – The German government and Intel Corp are expected to sign a deal for the U.S. chipmaker’s planned plant in Dresden, capping months of talks about the support needed for a project that its chief executive said would cost it tens of billions of dollars.
The chancellery said in a statement that Germany had decided to sign an agreement with Intel at 1245 GMT on Monday and Chancellor Olaf Schultz and Gelsinger would attend the ceremony.
The agreement comes at a time when the US and Europe are trying to lure big industrial players through a mix of government subsidies and favorable legislation, with Berlin worried about losing its attractiveness as a place to invest.
Intel has reportedly requested €10 billion in subsidies from Germany, where energy and labor costs are high.
Intel Chief Executive Officer Pat Gelsinger told Reuters on Friday that the gap between what Germany offered and what Intel needed was very large, but he expected an agreement to be reached.
“We’re not asking for handouts,” Gelsinger said, “we’re asking for competitiveness.” “Labour costs have gone up dramatically, material costs have gone up dramatically, so all of a sudden, the cost gap is bigger than we originally expected.”
Intel declined to comment on the amount of support.
Gelsinger spoke of “huge investments, tens of billions of dollars.”
The German government has not confirmed how much state funding the company will receive for the project in the central German city of Magdeburg.
Business newspaper Handelsblatt reported last week that the US company will receive 9.9 billion euros ($10.84 billion), up from the 6.8 billion it had previously pledged.
The Scholz government is investing billions of euros in subsidies to attract technology companies to Germany. This comes at a time of growing concern about supply chain fragility and dependence on South Korea and Taiwan for chips.
($1 = 0.9150 euros)
(Writing by Christophe Steitz; Editing by Rachel Moore, Jason Neely and Sharon Singleton)