Intel comes to Magdeburg
Intel says it needs 3,000 people to staff the semiconductor factory it plans to build by the end of the decade in Magdeburg, an eastern German city near Berlin. This year, the local apprentice program for chip-making technicians is training two.
The German government trumpeted Intel’s planned development here as a game changer, backed by federal subsidies totaling €10 billion that would help the economy pivot toward new industry. The outlay is part of a European Union effort unveiled this summer to double the Continent’s share of global chip production to compete with established producers in Asia.
But as I reported last week for The Wall Street Journal, this and similar projects face hurdles such as a shortage of skilled workers and an at-times Byzantine bureaucracy. High energy prices are one of the reasons Germany’s economy has stagnated since the end of last year and is expected to shrink this year.
The issues raise questions about Europe’s capacity to match the Biden administration’s manufacturing incentives offered through the Inflation Reduction Act and the $53 billion Chips Act. For Germany, which derives a bigger part of its gross domestic product from manufacturing than other countries on the Continent, expanding semiconductor production is essential to catching up technologically and increasing economic resilience.
To staff its factory in Magdeburg, Intel intends to send local trainees to a factory it operates in Ireland for the final year of their three-year apprenticeship program. Intel and local officials said there was no suitable local alternative in Magdeburg, a city of 240,000 people that lost a large part of its industrial base after German reunification in the 1990s.
At nearby Otto von Guericke University, officials are planning to build a new clean room and are starting a new academic program in semiconductor technology. Bernd Holthaus, the Intel executive in charge of hiring for the Magdeburg site, told me that 30-40% of the staff will come from outside Germany. My colleagues Annie Linskey and Joseph de Avila wrote earlier this year about how the Syracuse area is preparing for a new Micron chip fab which is planned for the suburb of Clay.
But how eager will people be to come to Magdeburg? The city feels noticeably less modern than larger German cities such as Berlin and Munich. Fewer people here speak English. The historic restaurant in the heart of downtown doesn’t accept credit-card payments for its signature dish, the Magdeburger Bötel, a serving of pork knuckle (Schweinshaxe) with sauerkraut, puréed peas and potatoes.
The sauerkraut was flavorless. It half-ringed the Schweinshaxe, slow-cooked so that it would fall easily from the bone (like an Osso Buco.) The spice came not from the sides of horseradish and Senf, but a nearby demonstration on a recent Monday. About 20 people carried signs saying “Deutschland Steht Auf!” — or Germany Stands Up — and sang a nationalist song. Even if your German is poor, you might recognize that the tune of the song was the old Soviet national anthem.
The AfD had 29% approval in the state of Saxony-Anhalt, according to a June poll by research group Insa, making it the second most popular party—just 2 percentage points behind the ruling CDU. Hostility toward immigrants has fueled that rise. Roughly 10% of the students at OVGU are Indian, according to Rektor Jens Strackeljan, but they generally don’t stick around after graduation.
Reint Gropp of the IHW in nearby Halle has attacked the subsidies granted for Intel and predicted difficulties in attracting the necessary workers. There is already a shortage of 62,000 semiconductor workers in Germany. “The labor market is tight, and this is going to make it tighter,” Gropp told me.
Intel’s Holthaus has a diplomatic answer on the question of attracting workers. “Every city has its character, and it needs to be anchored, acknowledged and brought forward,” he told me. “I think as long as we have the same goals and stay aligned to that it's less of a concern for me.”
That character includes a massive Protestant Cathedral, a riverfront park, a cute old market square and 1,000 years of history. The city was destroyed during the 30-Years war between Catholics and Protestants, then again during World War II. Then it was controlled by the socialist German Democratic Republic for 40 years and suffered greatly after German reunification as heavy industry became non-competitive.
Magdeburg felt to me like a Rust Belt city in the U.S. — its bones and institutions were built for more people and activity than it currently has. The result is a feeling of emptiness which is at times depressing. But at the same time, that void that can be filled with edgy activity that’s only possible because there is low-cost space and people who want nothing more than to make it great.
THE QUESTION: Otto on Guericke is known as the father of modern vacuum technology. What was the experiment that publicly showed its efficacy?
Know the answer? Drop me a line at jimmy.vielkind@gmail.com. Or just write with thoughts, feedback or to say hi.
THE LAST ANSWER: Hamburg sits on the river Elbe. One of the cool places I visited was the Elbphilharmonie, the symphonic hall that sits on an island in the river.