Berlin to sign deal with Intel after chip factory talks

By Friederike Heine

BERLIN (Reuters) – The German government and Intel are expected to sign a deal on the U.S. chipmaker’s 17 billion euro ($18.6 billion) factory in Dresden, capping months of talks over the subsidies needed for the project.

Intel is reportedly seeking subsidies worth 10 billion euros from Germany, where energy and labor costs are high.

Intel CEO Pat Gelsinger told Reuters on Friday the gap between what Germany had offered and what Intel needed was too big, but he expected to reach a deal.

Intel declined to comment on the amount of the subsidy.

Germany is scheduled to sign an agreement with Intel for 12:45 GMT on Monday and Chancellor Olaf Scholz and Intel’s Gelsinger will be present for the ceremony, the chancellery said in a statement.

The German government has not confirmed how much public funding the company is expected to receive for the project in the central German city of Magdeburg.

Business daily Handelsblatt reported last week that the US company would receive 9.9 billion euros ($10.84 billion), up from 6.8 billion previously pledged.

Scholz’s government is investing billions of euros in subsidies to attract tech companies to Germany. It comes at a time of growing concern over supply chain fragility and reliance on South Korea and Taiwan for chips.

($1 = 0.9150 euros)

(Writing by Friederike Heine, Christoph Steitz; editing by Rachel More and Jason Neely)

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