Intel is investing $33 billion in its Germany expansion as the country backtracks and agrees to more subsidies.

Intel has been working to build a “semiconductor fab mega-site” in Germany, and was initially offered 6.8 billion euros in subsidies. As the economy weakened and prices rose, Intel asked the German government for additional subsidies, bringing the total closer to 10 billion euros.

The German government initially refused, with Finance Minister Christian Lindner saying, “there is no more money available in the budget.”     

According to Reuters, the German government has backtracked, agreeing to provide Intel with nearly 10 billion in subsidies.

“Building the ‘Silicon Junction’ in Magdeburg is a critical part of our strategy for Intel’s growth. Combined with last week’s announcement of our investment in Wrocław, Poland, and the Ireland sites we already operate at scale, this creates a capacity corridor from wafers to complete packaged products that is unrivaled and a major step toward a balanced and resilient supply chain for Europe,” said Intel CEO Pat Gelsinger. “We’re grateful to the German federal government, Chancellor Olaf Scholz and the government of Saxony-Anhalt for their partnership and shared commitment to fulfilling the vision of a vibrant, sustainable, leading-edge semiconductor industry in Germany and the EU.”

Chancellor Olaf Scholz of Germany said, “Today’s agreement is an important step for Germany as a high-tech production location – and for our resilience. Intel’s semiconductor production in Magdeburg is the single largest foreign direct investment in German history. With this investment, we are catching up technologically with the world’s best and expanding our own capacities for the ecosystem development and production of microchips. This is good news for Magdeburg, for Germany and for all of Europe.”