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On June 19, 2023, Intel signed a letter of intent with the German federal government, planning to build two world-leading semiconductor wafer fabs (Fab 29.1 and 29.2) in Magdeburg, the capital of the German state of Saxony-Anhalt. The total investment is expected to exceed 30 billion euros, of which about one-third will come from funding from the German state government of Saxony-Anhalt, the federal government and the European Union.

Intel's letter of intent was signed. From left to right, Intel CEO Pat Gelsinger and German Chancellor Schulz Intel

However, a year later, the government of the German state of Saxony-Anhalt has doubts about the project's prospects.

According to German magazine Der Spiegel, the Saxony-Anhalt state government is preparing a "Plan B." In response to inquiries from the left-wing parties in the state parliament, the state government admitted that it was preparing for the potential failure of the Intel project, "in which case, it plans to push these plots of land to alternative industrial and commercial companies."

German magazine Der Spiegel reported

The Saxony-Anhalt state government said there was strong "settlement interest and purchase intentions" for the land from other companies, but acknowledged that if the "major investor" canceled its plans, the land might be unsaleable or unleasable.

Intel's Fab 29 was originally scheduled to start construction in the first half of 2023 and is expected to begin operations at the end of 2027, producing chips using the most advanced Intel 14A (1.4nm) and Intel 10A (1nm) process technologies.

Intel Magdeburg factory plan, the factory is light blue, marked as Fab 29.1 and Fab 29.2 Intel

However, due to EU subsidy issues, the start of construction of the factory has been postponed to summer 2024.

Later, because archaeologists discovered two 6,000-year-old tombs, the start date was postponed again. The current estimated start time has been postponed to May 2025.

However, on August 1 this year, Intel released a poor second-quarter financial report and announced that it would lay off more than 17,000 employees, exacerbating the German government's concerns about the prospects of the Magdeburg project.

"The state is playing a poker game with Intel, investing millions of euros without clear guarantees," said Eva von Angern, leader of the Left Party's parliamentary group. "This is very dangerous. If Intel's placement plan fails, the state will be held responsible for this risky deal."

In addition, the uncertainty surrounding Intel's project has also sparked discussion about the effectiveness of government subsidies.

Clemens Fuest, president of the Munich-based Ifo institute, called the project "doubtful," noting Germany would see limited benefit from billions of dollars in subsidies because Intel and other chipmakers would only produce locally and not conduct research and development.

As of now, Intel has not responded to the prospects of the Magdeburg project.

This article is an exclusive article of Observer.com and may not be reproduced without authorization.