This marks the final end of hopes for the construction of a large factory by technology giant Intel near Wrocław. On Wednesday, the American tech powerhouse officially declared that it is abandoning the project.
In June 2023, news broke that Intel would invest record-breaking funds in a facility near Wrocław. The tech giant had announced plans to open the most advanced production plant in this part of Europe, a Semiconductor Integration and Testing Facility. The investment was estimated at around PLN 20 billion and was considered the largest foreign investment in Polish history. The plant, to be located in the Legnica Special Economic Zone, was expected to create 2,000 jobs.
“I am very pleased that one of the key links in the production of cutting-edge technologies will be anchored here in Poland. It is extremely important that investments which ensure security, and at the same time significantly influence technological development, will be created in Poland,” said then-Prime Minister Mateusz Morawiecki during a June 2023 meeting with Intel CEO Pat Gelsinger.
No Intel Plant in Poland
However, dark clouds had been gathering over the massive investment in Poland for some time. Now, the declaration from Intel’s leadership extinguishes any remaining hopes for the construction of the plant.
On Thursday, the company published its Q2 results, and CEO Lip-Bu Tan announced significant cutbacks regarding the construction of semiconductor factories. Tan, who took over the position in March, emphasised that the past few months “have not been easy.” He stated that the company had “completed most” of the planned layoffs, which affected 15 percent of employees. Intel had previously indicated its intention to cut operating costs by $17 billion by 2025.
Tan also announced a series of other cuts, especially in the division that manufactures chips for other companies.
“In recent years, the company invested too much, too fast, without sufficient demand. As a result, our manufacturing base became unnecessarily fragmented and underutilised. We need to correct the course,” the CEO wrote in a letter to employees published on Thursday.
“With this in mind, we have decided not to proceed with previously planned projects in Germany and Poland. We also plan to consolidate our assembly and testing facilities in Costa Rica with our larger plants in Vietnam and Malaysia,” Tan stated.
The planned plant in Germany was to be the largest semiconductor factory in Europe. For the construction of the Intel facility in Magdeburg, valued at €30 billion, the German government was ready to contribute €10 billion.
A Grand Conference, Then a Flop
At the beginning of 2024, doubts began to surface regarding Intel’s investment due to the sluggishness of the newly appointed government under Donald Tusk.
The newspaper Dziennik Gazeta Prawna reported that the government was slow to submit a request to the European Commission for approval of state aid for Intel. The Tusk administration allegedly tried to negotiate changes to the investment terms with the company.
In September 2024, Minister of Digital Affairs Krzysztof Gawkowski announced that the European Commission had given the “green light” for notification of public aid to Intel, which was expected to amount to approximately PLN 7.5 billion. Soon after, the Office of Competition and Consumer Protection was expected to file the official notification to the EC. Deputy Minister of Digital Affairs, Dariusz Standerski, had said the contract with Intel was scheduled to be signed by the end of 2024.
However, just days after Gawkowski’s high-profile press conference, he announced that “Intel is suspending its key investments in Europe for two years.”
Intel in Trouble
Intel has found itself in financial difficulty. While the company’s stock rose 13 percent this year, 2024 also saw its worst-ever decline, with shares plunging by 60 percent, according to CNBC.
“Intel has been struggling for some time, as companies are turning to rivals such as Nvidia, known for its powerful AI chips. Intel has already scaled back its investment plans and announced it would suspend dividend payments,” reported filarybiznesu.pl back in August 2024.
On December 1, 2024, Pat Gelsinger stepped down from his position as CEO of Intel.