Intel (INTC) shares fell 6.1% on Thursday after reports emerged that the semiconductor giant may stall construction of two new chip manufacturing plants in Germany.

The company plans to build the wafer manufacturing facilities in Magdeburg, Germany, on the site it calls “Silicon Junction.” In June 2023, Intel announced that it would increase its investment in the project to around $33 billion after securing a government subsidy of around $11 billion to support construction.

Intel assumed that the Magdeburg plants would go online and produce high-performance semiconductors as early as 2027. However, according to media reports this week, the timetable now seems uncertain.

Concerns about timing and restructuring plans

Some investors have expressed concern that Intel may not pursue its plans in Germany given its goal of significant cost reductions.

Intel typically focuses its manufacturing capabilities on producing its own chips, but the company is working to expand its third-party manufacturing services to drive growth. Given the high cost of building manufacturing facilities, it remains to be seen how the capital-intensive expansion of contract manufacturing services will fit into Intel’s restructuring and cost-cutting initiatives, Assets.

Skepticism about Intel’s manufacturing facilities in Germany follows the news that chipmaker rival Taiwan Semiconductor Manufacturing (TSM) has broken ground on its own eleven billion dollar factory in Dresden.

Share price development

Following Thursday’s losses, Intel shares are down about 60% so far in 2024.

The year-to-date losses set Intel stock apart from many peers in the semiconductor industry that have benefited from expectations about artificial intelligence (AI). The Philadelphia Semiconductor Index (SOX) is up more than 20% this year.