Despite implementing a significant cost-saving program, Intel appears committed to its planned chip factory in Magdeburg. The US semiconductor giant’s CEO, Pat Gelsinger, stated that the company continues to invest in core areas. By expanding production capacities in the US and the EU, Intel aims to strengthen supply chain resilience.
Massive savings and job cuts
On Thursday, Intel announced plans to save over ten billion US dollars next year. This involves cutting more than 15 percent of its global workforce of around 125,000 employees, equating to approximately 18,750 jobs. Additionally, the company will temporarily suspend dividend payments from the fourth quarter.
According to the latest financial report, Intel incurred a loss of about 1.6 billion US dollars (approximately 1.47 billion euros) in the last quarter. Gelsinger communicated to employees that Intel’s current costs are too high and profit margins too low. Last year, revenue was 24 billion euros lower than in 2020, despite a ten percent increase in the workforce.
Adapting investment plans to market conditions
Despite the financial challenges, Intel plans to expand its manufacturing capacities and master state-of-the-art production processes. The company aims to survive by becoming a stronger contract manufacturer for other chip developers. Part of Intel’s strategy includes building a factory in Magdeburg, estimated to cost around 30 billion euros.
Although Gelsinger did not provide specific details about projects in Germany, France, and Italy, he affirmed that Intel intends to stick to its overall strategy. He mentioned that the investment plans have been adjusted to align with the anticipated market development, without specifying further details. Intel also plans to avoid overbuilding capacity until new orders are secured.
Despite the broader cost-cutting measures, the state government of Saxony-Anhalt remains optimistic. “According to Intel, there are no changes to the planning for the Magdeburg site,” said government spokesman Matthias Schuppe.
Intel is still waiting for approvals to build the factory in Magdeburg, including for the billions in subsidies that are intended to cushion the costs. The start of construction has recently been repeatedly postponed and is currently planned for 2025. The State Administration Office has already approved the first construction measures.
