Germany vows to subsidize Intel and TSMC fabs despite budget crisis — billions in funding still in limbo

TSMC manufacturing
(Image credit: TSMC)

The German government is committed to supporting the construction of chip fabs by Intel, TSMC, and Wolfspeed, despite facing financial challenges due to a budget crisis, reports HardwareLuxx. In fact, Intel and Wolfspeed have already received firm funding commitments from the government.

"The decisive sentence is, all projects that we have conceived must be made possible," said Robert Habeck, Minister of Economy, emphasizing strong support for the fab projects.

Germany has committed $22 billion in incentives to semiconductor companies such as IntelTSMC, and Wolfspeed, leading to commitments to build new fabs in Germany. However, the 2024 Federal Budget in Germany is facing delays due to a decision by the Federal Constitutional Court, which found reallocation of unspent Corona crisis funds to the Climate and Transformation Fund in 2022 unconstitutional. The German government had intended to use this fund to subsidize chip manufacturing, which is why they had to postpone the final discussions and approval of the budget.

This court ruling has introduced uncertainties into the funding, but it looks like both federal and local authorities are dedicated to support the construction of new fabs. There is a strong consensus among political parties and state governments about the importance of these semiconductor projects for the future of German industry.

The government is now looking for ways to fund these projects. They are considering using the current federal budget and possibly suspending the debt brake for this and next year. They are also mulling cutting budgets in other departments. In addition, Saarland, which promised subsidies to Wolfspeed, is facing constitutional legal challenges with its credit-financed fund that demand revisions to its financial planning.

To address these financial challenges, the Bundestag approved a supplementary budget for 2023, allowing for the raising of an additional €45 billion. However, this amount is still not enough to cover the total cost needed for these semiconductor projects and other spending, indicating that the German government still has financial hurdles to overcome.

Anton Shilov
Freelance News Writer

Anton Shilov is a Freelance News Writer at Tom’s Hardware US. Over the past couple of decades, he has covered everything from CPUs and GPUs to supercomputers and from modern process technologies and latest fab tools to high-tech industry trends.