Federal Court Ruling Casts Uncertainty Over Funding for Tech Mega-Fab in Germany

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Federal Court Ruling Casts Uncertainty Over Funding for Tech Mega-Fab in Germany

Chancellor Olaf Scholz referred to it as “a significant step for Germany” back in June 2023. At that time, he, along with CEO Pat Gelsinger, signed an agreement in Berlin to support Intel’s planned Mega-Fab in Magdeburg. However, following a ruling from the Federal Constitutional Court, the funding for this support has suddenly become uncertain—and consequently, so has the future of the Magdeburg Mega-Fab.

The Federal Constitutional Court declared the second supplementary budget law of 2021 void on Wednesday after the Union faction filed a complaint. Originally, in 2021, funds intended to tackle the coronavirus crisis but left unclaimed were shifted to the Climate and Transformation Fund (KTF). These funds were not to be used elsewhere—which includes the subsidization of the US corporation.

“I expect the federal government to swiftly clarify the financing of all projects currently in question—especially for us,” said Sven Schulze, the Minister of Economic Affairs of Saxony-Anhalt, in a statement obtained by Golem.de.

“It’s quite astonishing that the budget management is so precarious that a court ruling can cause such significant uncertainty,” he added. Given this uncertainty, it’s “crucial to swiftly confirm that the funding here remains guaranteed.”

Billions in support for Intel, TSMC, and others

There’s particular uncertainty in his federal state, where several billion euros from the fund were supposed to flow into Intel’s Mega-Fab near Magdeburg, announced in 2022. The federal government intended to support one-third of the project, which is expected to create several thousand jobs in the region by 2027.

Intel isn’t the only corporation that was convinced to establish its presence in Germany with funding. By 2027, the federal government aimed to allocate a total of 20 billion euros for the construction of semiconductor factories—funds that were supposed to come from the Climate and Transformation Fund, not the federal budget.

This very fund was at the center of the Federal Constitutional Court’s decision. However, the government’s reasoning that supporting private-sector spending in the digitalization field was necessary to cope with the pandemic’s aftermath “proves to be insufficiently sustainable,” as stated in the ruling.

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Michael Lynch
With a passion for cybersecurity, Michael Lynch covers data protection and online privacy, providing expert guidance and updates on digital security matters.