In June, the German government signed an agreement with Intel to build two chip plants in the eastern German city of Magdeburg. But not surprisingly, the subsequent push has encountered numerous challenges and obstacles.

The German government trumpeted Intel's plan as a game-changer, arguing that the plant would help transform the German economy into new industries. The project, which will cost around 30 billion euros to build, will receive a total of 10 billion euros ($10.59 billion) in subsidies from the German federal government.
The spending is part of an EU plan announced this summer to double the bloc's share of global chip production in order to compete with established players in Asia.
In practice, however, Intel's plan and similar projects face obstacles such as a shortage of skilled workers, energy problems and bureaucracy. High energy prices have caused the German economy to stagnate since the end of last year, and there has even been a wave of deindustrialization.
Intel has said it needs 3,000 employees by the end of the 2020s for a semiconductor plant it plans to build in Germany. This year, however, a local apprenticeship program designed to train technicians is training just two people.
Intel had hoped the first plant could start production as early as 2027. But for now, even with the support of the German government and 10 billion euros in subsidies, it will not be easy to proceed as planned.
To staff the Magdeburg facility, Intel plans to send locally trained personnel to one of its facilities in Ireland for the final year of a three-year training program. Both Intel and Magdeburg officials said there was no suitable local training location. Magdeburg, a small city of 240,000 people, lost much of its industrial base after German reunification in the 1990s.
Intel's demand for cheap power has sparked a national debate in Germany over industrial power subsidies that has even split Chancellor Angela Scholz's ruling coalition. To accommodate the new employees and their families, Magdeburg's schools, housing and transport infrastructure will need to be upgraded, which could cost an additional €1 billion.
Many challenges
A few years ago, Germany's automakers had to suspend some production after a sudden global shortage of semiconductors, underscoring the industry's dependence on U.S. and Asian suppliers. Since then, German politicians and industry executives have vowed to make their manufacturers more resilient by reducing their reliance on foreign suppliers.
Therefore, in addition to Intel, the German government also promised to give TSMC, Infineon, Wolfspeed and other semiconductor companies more than 10 billion euros in subsidies. TSMC's plant in Germany is scheduled to start construction in 2024 and start production in 2027.
At present, Intel has opened an office in Magdeburg, and actively promote related plans. Stefanie Klemmt, the chamber official overseeing vocational training in Magdeburg, said the first 20 apprentices would begin training next August, with the hope of eventually increasing the number nine-fold, with Intel aiming to start production in 2027.
But local residents are not thrilled about the new plant. It is feared that the plant will displace nearby farms, bring greater traffic and disrupt water supplies. Potential local hostility to foreigners could spell some trouble for Intel.
The cost of electricity has been a concern for Intel executives, with facilities similar to the proposed plant using about 300 million kilowatt-hours of electricity per quarter. According to EU data, in the second half of 2022, the average price of electricity in Germany was 19 cents per kilowatt-hour, more than 40 percent higher than in France and Poland.