Intel to halt key investments in Germany and Poland for two years
One of the largest chip manufacturers, American Intel, will stop investing in Europe. A two-year suspension of funding for a number of major projects in Germany and Poland is reported by RIA Novosti.
Intel announced a key investment in June 2023. The company planned to invest about $4.6 billion in the launch of a semiconductor integration and testing plant in Menkin near Wroclaw.
According to the head of the Polish Ministry of Digital Development Krzysztof Gawkowski, attracting investment from Intel was one of the main projects of the previous government. The authorities planned that the construction of the plant in the country would become the largest direct foreign investment. The project was important for the development of the country’s semiconductor industry, the official admitted.
The reason why Intel will suspend investments in the European economy is financial problems. Contrary to analysts’ forecasts, sales in the second quarter will amount to 12.5-13.5 billion dollars instead of 14.38. Instead of profit of 30 cents per share, the company’s loss per share will be 3 cents. Against the backdrop of negative news, the company lost more than 19 percent of its value (this year, the company’s shares have fallen by more than 42 percent) and announced plans to reduce its workforce by 15 percent. The layoffs will affect 15 thousand people.
Intel was forced to cut its sales expectations for May after the US government revoked its license to supply chips to China’s Huawei as part of a declared chip war.
The company will also suspend dividend payments to shareholders until “cash flows improve to a sustainably high level.” Intel has paid them since 1992. The company will also cut spending on new plants and equipment in 2024 by more than 20 percent. The current budget is between $25 billion and $27 billion. Next year, spending will be between $20 billion and $23 billion.
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