Since March 15, 2022, it is clear that Intel will build a cutting-edge semiconductor fab in Magdeburg for 17 billion euros. Someone who played a significant role there is Max Milbredt. Markt&Technik asked the investor consultant for semiconductor industry at Germany Trade & Invest how this happened.
Markt&Technik: How and when was the initial approach by Intel? Didn't it go through the Chancellor's Office?
Max Milbredt: That's right; Intel's first contact point in March 2021 was the Chancellor's Office. As the German government's location agency, we work hand in hand, and therefore the Chancellor's Office referred directly to us for finding a location and anything associated with it.
What was the very first assignment for you?
Intel had put together an in-house team first for selecting the site. This team clearly communicated the first benchmark parameters, which were quite impressive. The importance of this potential investment for Germany and Europe was very clear. Our task was to present initial ideas for sites as quickly as possible. In the beginning, a brownfield facility was a second option, as Intel needed capacity in the short-term. We were then able to present the first options within three working days.
Only three days for a first result! How did you accomplish this challenge?
With hard work and the help of the federal states. First of all, at Germany Trade & Invest we are organized by industries, so I have had eleven years of experience with the needs of the semiconductor industry. So, I was aware of one or the other candidate location. And as far as the mega fab was concerned, we depended on the very good cooperation with our sister organizations in the German federal states, which were able to provide information very quickly. With such an important project, it is of course essential to involve all the federal states and have them bid for the project in order to achieve the best possible result. But coordinating 16 inquiries to the federal states in one or two days is no mean task, I have to admit! But in the end, according to Intel CEO Pat Gelsinger, we submitted the most relevant bids of all the countries and ultimately also the best quality bids, because we had several irons in the fire until the very end.
From your point of view, was Magdeburg already your favorite at that time? What were the arguments in favor of this location? Because such a fab needs lots of infrastructure and skilled workers.
Magdeburg was interesting, but did initially not meet all the criteria. Frankly spoken: Who expected Magdeburg as location before the first public rumors in the semiconductor industry came up? At first, I didn't necessarily either. But after the initial interest – Saxony-Anhalt and Magdeburg didn't even know who was behind the inquiry – the city had the fortune of the brave. We were able to significantly increase the size of the site on offer, as we had already been planning for some time and had also coordinated with the neighboring municipalities of Sülzetal and Wanzleben. When I saw the complete area for the first time, I was amazed. From that moment on, I knew that it would be very difficult to beat us internationally, at least in terms of space.
In addition, Magdeburg had the advantage, for example, that a 380 kV power line runs directly alongside the premises. Of course, this saves a lot of time and effort, for example for the power line connection. A gas supply also runs through the site. So the infrastructure was largely in place. In this respect, it was also a huge advantage for Magdeburg that the city had already participated in site competitions for major projects with this area in the past. This will certainly also be the case in the future for other sites that did not succeed this time. Therefore, all the work that we have put into this site competition together has not been in vain.
Generally speaking, the state of Saxony-Anhalt and the city of Magdeburg, with Sandra-Yvonne Stieger, the city's Deputy Mayor for Economic Affairs, and her entire team must be commended. No matter what happened, the city really wanted this project. This was evident from the fact that solutions were proposed within a very short time, huge questionnaires were processed during vacation, and so on.
After this first hurdle, there were of course others. What happened next after this first result?
The pure area is fine, of course, but then you get successively deeper into the details of power, water and gas supply. You also have to discuss the acquisition of the real estate, the resettlement of field hamsters, emissions from cows – yes, you also have to deal with this during a project like this – and the development and recruitment of skilled workers, possible Fraunhofer institutes to be newly established, and so on. You can imagine how much there is to figure out. On the one hand, there is the whole political complex and the eligibility for funding of such a huge project, and on the other hand, there are tens, if not hundreds of hours of meetings on technical requirements. You've already mentioned how challenging it is to plan and build a leading-edge fab.
What additional challenges did the Corona pandemic bring and how did you address them?
That was something special indeed. Normally, Intel might have made much more on-site visits here, but we had travel restrictions. Right at the beginning, Pat Gelsinger had made several public appearances in Germany. To make this happen, we had to write invitations behind the scenes, for example, and, above all, we had to get exceptions approved from the quarantine regulations that were in force at that time. This was, of course, completely new to me and took me more than an entire day. I would never have thought that I would have to spend a whole day on the phone talking to the health authorities and the federal police! In the end, however, everything worked out perfectly.
Intel has certainly approached other European countries as well. Why did the company choose Germany and the Magdeburg site?
Yes, of course Intel examined all the options. First of all, the hard factors clearly speak in favor of Germany and Magdeburg: a very large, flat area situated on the outskirts of a metropolitan city. There are seven universities and colleges close to Magdeburg, with which Intel can cultivate skilled workers, and the city has the potential for attracting new residents and new suppliers. In addition, Magdeburg, together with the Dresden and Erfurt/Jena regions, forms a new Central German triangle which is the German and probably European center of semiconductor manufacturing and will be even stronger in the future. And Berlin and Wolfsburg are not far away either. I already explained the infrastructural advantages. We were always very quick, and everyone was aware of the implications.
And confidentiality was also always maintained. After all, there was always speculation in the media about locations – sometimes without any real basis. It was amusing to watch. This commitment and unconditional will of everyone involved in the Chancellor's Office, the Federal Ministry of Economics, GTAI, the state of Saxony-Anhalt and the city of Magdeburg should not be underestimated and has led to a great deal of trust.
When Intel initiated this process, the EU Chips Act had not yet been conceived. Would Intel have decided to build in Magdeburg even without this funding?
Without any subsidies at all, semiconductor fabs in Europe are unlikely to be built in the long term. Over the past two decades, we have been able to observe quite well where in the world new fabs have settled and why. You don't have to like it, but in the U.S. and Europe we will still have no choice but to adapt to competition between countries, also by means of subsidies. Otherwise, we would leave this playing field completely to others in the long term. Since the investment costs for leading-edge manufacturing are so exorbitantly high these days that only very few companies worldwide can even afford them, it can also be interpreted in this way: All of us together – private and public sector – are using subsidies to ensure that Moore's Law continues to be applied and that technical progress continues to be made. Companies are less and less able to make these massive investments on their own.
In addition to the completely new plant being built in Magdeburg, Intel had also inquired about a brownfield plant for packaging. What happened as a result of that?
That would have been an additional highlight. At the very beginning, we offered existing buildings because Intel was seriously looking for capacity on a very short notice. We also had a few ideas that found fertile ground - there are not many buildings in the world suitable for the semiconductor industry that can be vacant in the short-term. Despite positive feedback on one of our proposals, the investment eventually went to Rio Rancho, New Mexico, in May 2021. But again, if there are suitable usable buildings in Germany, I'm always interested. You never know who we can convince to invest in Germany.