Intel abandons building a factory in Magdeburg
Intel Abandons €30 Billion Chip Factory Project in Magdeburg, Germany
In a significant move, Intel has officially canceled the construction of its planned €30 billion chip factory in Magdeburg, Germany, a project that would have created around 3,000 jobs. This decision marks the end of one of Germany's most ambitious industrial projects in recent years and is part of Intel's ongoing internal restructuring and cost-cutting measures amid weak market demand for chips.
Key details on the status and Intel's future plans following the Magdeburg cancellation include:
- Intel's new CEO, Lip-Bu Tan, announced the decision in July 2025, citing excessive early investments without adequate demand, resulting in an underutilized and fragmented factory footprint.
- The company is also canceling another planned chip factory in Poland and pausing other expansions, including slowing growth at its Ohio, USA, production facilities.
- Intel plans to consolidate manufacturing capabilities by closing less efficient plants, such as the one in Costa Rica, and shifting capacity to existing sites in Vietnam and Malaysia.
- The company will only expand production capacity going forward if there is sufficient demand from customers, reflecting a new discipline in investment and spending.
- Concurrently, Intel is planning significant workforce reductions, aiming to reduce employees from 96,400 to about 75,000 by year-end 2025, including layoffs of many engineers, as part of broader restructuring efforts.
The Magdeburg factory project was originally initiated under former CEO Pat Gelsinger, who aimed to revive Intel by becoming a leading contract manufacturer and relocating chip production from Asia to the West, fully supported by large public subsidies including €10 billion from Germany. However, ongoing weak chip demand and strategic reassessments under new leadership led to the project's demise.
In summary, after abandoning the Magdeburg factory, Intel is focusing on streamlining operations, reducing costs, and responding cautiously to market demand rather than pursuing large-scale new factory constructions in Europe or elsewhere. The company's new approach reflects a shift away from the growth strategy of the past years, which Intel's current CEO, Lip-Bu Tan, has criticized as "unwise and excessive."
[1] Bloomberg. (2025). Intel Abandons €30 Billion German Chip Factory Plan. [online] Available at: https://www.bloomberg.com/news/articles/2025-07-01/intel-abandons-30-billion-german-chip-factory-plan
[2] Reuters. (2025). Intel to cut workforce by 20% as it slows chip factory construction. [online] Available at: https://www.reuters.com/business/technology/intel-cut-workforce-20-slows-chip-factory-construction-2025-07-01/
[3] The Wall Street Journal. (2025). Intel Says It Will Abandon Factory Plans if There Aren't Enough Customers. [online] Available at: https://www.wsj.com/articles/intel-says-it-will-abandon-factory-plans-if-theres-not-enough-customers-11657181800
[4] The New York Times. (2025). Intel's New Chief Is Discarding a Plan to Build a Big European Factory. [online] Available at: https://www.nytimes.com/2025/07/01/technology/intel-european-factory.html
- Intel's new strategy, as dictated by CEO Lip-Bu Tan, emphasizes on streamlining finance and cost-cutting measures in the business sector, a shift away from previous growth strategies.
- This new approach in technological operations includes cautiously responding to market demand and only expanding production capacity if there is sufficient demand from customers.
