Intel (INTC 3.79%) stock is retreating again in Thursday's trading. The semiconductor company's share price was down 3.9% as of 12:15 p.m. ET, according to data from S&P Global Market Intelligence.
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Concerns are mounting about the future of Intel's new chip fabrication plant in Germany. DigiTimes and Fortune magazine published separate reports today indicating that the construction of the manufacturing facility may be in doubt.
Investors are worried about Intel's European fab plans
Intel has been planning to begin construction on two new chip manufacturing facilities near Magdeburg, Germany. The fabs are supposed to be concentrated on the manufacturing of high-performance semiconductors and were expected to be open and producing chips by 2027. But it looks like that timeline is now in doubt, and it's possible that construction could be abandoned altogether.
Through the European Chips Act, Intel was on track to receive government funding that would cover somewhere around $11 billion of the $33 billion used to construct the new fabs in Germany. But the semiconductor company is in the midst of dramatic cost-cutting initiatives, and some investors and analysts are worried that it will abandon the new facilities as part of its restructuring initiatives.
Is Intel really ready to win in fabs?
Uncertainty about Intel's planned construction of a new fab plant in Germany comes on the heels of news that the European Union has just approved funding a new plant to be built by Taiwan Semiconductor Manufacturing. Construction of the new $11 billion plant kicked off earlier this week, and the E.U. will be providing $5.5 billion in funding.
Intel is currently the world's third-largest chip manufacturer, trailing behind TSMC and Samsung. The company primarily uses its fabs to produce its own chip designs, but its third-party contract fab services are a key part of its growth strategy. But despite receiving billions of dollars in subsidies from the U.S., the E.U., Israel, and other countries, there's a lot of uncertainty about the company's outlook in the fab space. Building and maintaining chip fabrication plants is incredibly resource-intensive, and the push into providing contract fab services comes at a time when the business is struggling and looking for ways to reduce expenses.
