Subsidies that multinational chipmakers are set to receive to build their fabs in Europe will come from two sources: the European Union itself, as part of the European Chips Act approved in July, and individual states. So far, Germany has promised $22 billion in incentives to chipmakers like Intel and TSMC, which is why the companies announced plans to build fabs there. But it looks like a stalled German budget approval has slowed down billions for the chipmakers, according to a report from ComputerBase.de.
Both Intel and TSMC vowed to invest billions in their projects in Germany, so without timely government money, the companies may need to invest additional money themselves (i.e., increase their CapEx or reallocate funds from other projects), scale down their projects, slow buildout, or find additional investors.
The German Federal Budget for 2024 has been delayed in response to a ruling by the Federal Constitutional Court, which deemed reallocation of unused Corona funds to the Climate and Transformation Fund in 2022 as unconstitutional. The German government planned to use the Climate and Transformation Fund to subsidize chipmaking as these are sustainable economic projects — but now that it cannot be done, the ruling coalition (consisting of the SPD, Greens, and FDP) has postponed the final discussions and approval of the budget.
This means that the budget will not go to the Bundestag for a vote next week (as planned) and will most likely no longer be signed by the Federal President in time before the end of the year. While the coalition aims to finalize the budget within the year, the exact timeline for the approval of the 2024 budget remains uncertain due to these complications.
Given the delay and revisions in the budget thanks to the constitutional court ruling, all areas of government spending, including potential subsidies for chipmakers, might be under review. This could lead to adjustments in the allocation of funds or even the cutting of subsidies altogether. This means that Intel and TSMC may not get subsidies on time — or at all — next year, which will have implications on how the companies conduct business. But at this point it is hard to tell how exactly the German budget crisis will affect Intel, TSMC, and others.
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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.