Intel suspends planned new plants in Poland and Germany for two years

US tech giant Intel has suspended plans to build a major new chip plant in Poland, as well as one in neighbouring Germany, due to its efforts to cut costs amid lower-than-expected demand.

The announcement comes just days after Poland’s government revealed that it had received EU approval to provide over 7.4 billion zloty (€1.7 billion) in state aid for the 25 billion zloty project and expressed hope that the investment would launch by the end of this year.

“We will pause our projects in Poland and Germany by approximately two years based on anticipated market demand,” Intel CEO Pat Gelsinger said in a statement issued on Monday.

“We must continue acting with urgency to create a more competitive cost structure and deliver the $10 billion in savings target we announced last month,” added Gelsinger. In April, Intel announced that its manufacturing unit had posted losses of $7 billion in 2023 while revenue was down 31% year-on-year.

Shortly after Gelsinger’s announcement, Poland’s digital affairs ministry issued its own statement saying that its head, Krzysztof Gawkowski, had spoken with the Intel CEO, who had explained that the decision was “due to the company’s deteriorating global financial situation”.

“Taking note of Intel’s global plans, the digital affairs ministry assures that it is open to intensive support for other semiconductor investments in Poland in the coming months,” added the ministry.

Just last week, Gawkowski announced that the European Commission had given the green light for the Polish government to provide state aid for the project.

The minister had said that the Intel plant – which would be located near the city of Wrocław and would assemble and test semiconductor chips – would help “guarantee both better economic development and greater security in Poland”.

Deputy digital affairs minister Dariusz Standerski added last week that the government hoped a final agreement could be signed with Intel by the end of this year, paving the way for construction of the facility to begin.

The plant is meant to become part of an EU-wide semiconductor supply chain being developed by Intel, including an existing wafer fabrication facility in Ireland and a planned one in Germany, which has also now been delayed by two years.

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Yesterday’s announcement of delays was met with criticism and ridicule of the government by figures from Poland’s opposition Law and Justice (PiS) party, which was in power when plans for the Intel plant were first put in place last year.

“They boasted until the very last moment that they were working on Intel’s investment,” wrote former PiS Prime Minister Mateusz Morawiecki on social media. “Today, they are withdrawing under cover of darkness.”

“Intel’s withdrawal from the investment is bad news for Poland,” commented former PiS digital affairs minister Janusz Cieszyński. “Now the government faces a very big challenge of how to get out of this situation.”

Cieszyński suggested that the government has three options: to “negotiate a generous reservation fee with Intel for these two years of waiting”; to find a new investor; or to abandon the project and use the funds elsewhere.

Main image credit: BoliviaInteligente/Unsplash

Daniel Tilles

Daniel Tilles is editor-in-chief of Notes from Poland. He has written on Polish affairs for a wide range of publications, including Foreign Policy, POLITICO Europe, EUobserver and Dziennik Gazeta Prawna.