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These were the coups of the year for the German government's industrial policy. With Intel in Magdeburg and TSMC in Dresden two of the biggest players in perhaps the world's most important future market are settling in Germany: the chip industry.
Berlin is willing to pay for this: Intel receives 9.9 billion euros in state support for its 33 billion euro plant. TSMC receives half of its investment of ten billion euros from the state.
However, for chip factories, it is not only the subsidy, but perhaps even more so the power supply that is the decisive location factor. Semiconductor production is very energy-intensive. It is therefore surprising that Germany, of all countries, with its internationally high energy prices, has been able to convince chip manufacturers of its merits.
This contradiction can be resolved, among other things, by the fact that there are further agreements with the German government - at least for some chip projects. This is now shown by the Federal Ministry of Economics' answers to parliamentary questions from Christian Leye and Alexander Ulrich, members of the Left Party, which have been made available to Handelsblatt.
There are several agreements at Intel. The answer from State Secretary for Economic Affairs Udo Philipp states: "With regard to securing the electricity price in the future, it has been agreed that the federal government will be available for talks with the company in the event of extraordinary price increases in order to seek solutions and examine support options."
Intel: Speech clause instead of subsidy automatism
Intel is aiming for a "stable, reliable electricity price for the future". The company is currently in talks with several local energy suppliers. The aim is for the Group to agree purchase guarantees in order to secure an average electricity price of ten cents per kilowatt hour for 20 years, according to government sources.
However, there is no automatic mechanism behind the clause for further state aid if the electricity price exceeds the threshold. According to negotiating circles, this is exactly what Intel managers had demanded in the negotiations. However, the Ministry of Economic Affairs and the Chancellery had blocked this.
In addition to the approximately ten billion euro subsidy, only a "speech clause" has now been agreed. If electricity prices rise sharply, Intel can approach the federal government again and ask for further state aid. However, it is not certain that the government will agree to this.
Furthermore, the clause only applies in the event that the increase in Intel's electricity price is caused outside "the company's sphere of influence", for example by another energy crisis.
Intel has promised to switch completely to green electricity by 2030. Last year, the proportion of green electricity was 93 percent, according to the company.
At the moment, Saxony-Anhalt still has more electricity from renewable energies than the state itself consumes, the state's Minister of Economic Affairs, Sven Schulze, told Handelsblatt. However, this will change over the next few years with the arrival of large companies such as Intel.
TSMC: Electricity price less important
At TSMC, government support for electricity prices is significantly lower. Secretary of State for Economic Affairs Philipp writes: "No agreements have been made between the federal government and the company, for example with regard to an electricity price."
The reason for this is probably that Intel and TSMC are planning to use completely different technologies. In Magdeburg, Intel will probably use the world's most modern and complex production process from the Dutch system manufacturer ASML, High-NA EUV. The technology is particularly energy-intensive.
In addition: The consulting company BCG In the past, every significant technological leap meant that five to 15 percent more process steps were required. This means that more machines are needed and larger factories with bigger cleanrooms. All of this increases electricity consumption.
The electricity price is therefore much more important for Intel than for TSMC due to the complex production process. High-NA EUV can be used to produce chips with structure sizes of less than two nanometers. The Taiwanese, on the other hand, initially want to produce chips with structure sizes of 22 and 28 nanometers as well as 12 and 16 nanometers in their new factory in Dresden.
But the electricity price issue could become more relevant for TSMC. Intel produces similarly small chips to Intel at other locations abroad, which is also conceivable for Dresden in the future.
Left-wing MP Leye is therefore surprised that concessions have been made to Intel. The traffic light lacks a well thought-out, holistic chip strategy. "When promoting semiconductor projects, rules apply to one company that are different for the next. The traffic light needs to make significant improvements here."
Chip companies could go away empty-handed with industrial electricity prices
Ultimately, Intel and TSMC must hope that electricity prices in Germany remain at least somewhat competitive. The chances of them benefiting from a possible industrial electricity price are dwindling.
It is still uncertain whether this will come at all. However, it is foreseeable that it will come in a much narrower form, if at all. Federal Economics Minister Robert Habeck (Greens) originally wanted to include around 9,000 companies, explicitly including chip manufacturers.
The Ministry of Economic Affairs had estimated the costs of the original concept at 25 to 30 billion euros. However, it is now considered unlikely that this sum will be raised due to the federal government's limited financial options as a result of the debt brake. Various concepts for downsizing are therefore on the table at the Ministry of Economic Affairs, including one aimed at 340 companies.
The chip manufacturers would then most likely be out. The good news for Magdeburg and Dresden: Intel and TSMC have not linked their location commitments to the industrial electricity price.
This article first appeared in the Handelsblatt.
