BERLIN/STOCKHOLM: Intel ( INTC.O ) will spend more than 30 billion euros ($33 billion) to build two chip-making plants in Magdeburg as part of its expansion drive in Europe, the chancellor said. Olaf Schulz called Monday Germany’s biggest. Never foreign investment.

Berlin has agreed to about 10 billion euros in subsidies with the U.S. chipmaker, a person familiar with the matter said, after initially offering Intel 6.8 billion euros to build two major facilities in the eastern city. was

Intel CEO Pat Gelsinger said he was grateful to the government and the state of Saxony-Anhalt, where Magdeburg is located, for “fulfilling the vision of a dynamic, sustainable, leading semiconductor industry in Germany and the EU”.

Under Gelsinger, Intel is investing billions in building factories on three continents to regain its dominance in chipmaking and take on rivals AMD ( AMD.O ), Nvidia ( NVDA.O ) and Samsung (005930. KS) can be better compared.

“Today’s agreement is an important step forward for Germany as a high-tech production location – and for our flexibility,” Scholz said after Monday’s signing.

“With this investment, we are joining the best in the world in terms of technology and expanding our capabilities for ecosystem development and microchip production.”

The German deal marks Intel’s third major investment in four days. It unveiled plans on Friday for a $4.6 billion chip plant in Poland, another EU member, while Israel said on Sunday that Intel would spend $25 billion on a factory there.

Globally, semiconductor manufacturing is expected to become a trillion-dollar industry by 2030, growing to $600 billion in 2021, according to McKinsey.

With both the United States and Europe trying to attract large industrial players through state subsidies and favorable legislation, Germany is concerned about losing appeal as an investment destination.

The government in Berlin is investing billions of euros in subsidies to attract tech companies amid a fragile supply chain and a growing reliance on South Korea and Taiwan for chips.

Attractive location

“The confirmation of Intel’s size and increased commitment to Intel’s expansion in Magdeburg speaks louder than words about Germany’s appeal as a high-tech business location,” said Robert Herrmann, CEO of the government agency Germany Trade and Invest. Speaks aloud.”

Berlin is also in talks with Taiwan’s TSMC ( 2330.TW ) and Swedish electric vehicle battery maker Nordvolt about setting up production in Germany, which already has Tesla ( TSLA.O ) operating there. It has convinced to build the first European Gigafactory.

Frankfurt-listed Intel shares were up 0.3% at 1534 GMT.

Monday’s agreement includes what Intel said has been increased government support, including incentives, reflecting the broader scope of the project since it was first announced in March 2022.

Initially, Intel wanted to invest 17 billion euros in the Magdeburg plant, an amount that has almost doubled to more than 30 billion.

“It shows: Germany is an extremely attractive location. We play at the forefront of global competition and secure sustainable and qualified jobs and value creation,” said Economy Minister Robert Haebeck.

Intel said the first facility in Magdeburg is expected to enter operation 4-5 years after the European Commission approves the subsidy package.

The U.S. chipmaker said the first expansion would create about 7,000 construction jobs, in addition to about 3,000 high-tech jobs at Intel and tens of thousands of jobs across the industry.

Intel last year announced plans to build a major chip complex in Germany and facilities in Ireland and France as it seeks to take advantage of easier funding rules and subsidies from the European Commission. The European Union is trying to reduce its dependence on US and Asian chip supplies.

Gelsinger told Reuters on Friday that the gap between what Germany offered in subsidies and what Intel needed was too big, but said he expected to reach a deal, he added. Said that their application was against cost.

“We lost that industry to Asia, if we want to bring it back we have to be competitive,” he said.