Wie sagt man: Not cheap as chips?

Deutschland had a dream of boosting its semiconductor production and promised rich subsidies to chipmakers. But now, amid budget woes, that support is in doubt.

It committed $10 billion for Intel, which is building factories in Magdeburg; $5 billion in subsidies for a new fabrication plant built by Taiwanese giant TSMC along with Dutch company NXP, and German firms Bosch and Infineon. German Chancellor Olaf Scholz even noted in July how impressive it was that “so many German and international companies are choosing Germany for the expansion of their semiconductor production.”

But last month, a German court ruled that Scholz’s government violated its constitutional powers when he moved $65 billion in unused funds earmarked for the COVID-19 pandemic to the “climate and transformation” fund. The bad news for chipmakers? That was the money earmarked for their subsidies.

Germany wants to position itself as particularly friendly to industry, not only courting multinational tech corporations willing to build manufacturing plants, but also — in a recent shock move — by throwing a wrench in EU plans to heavily regulate large language models like OpenAI’s GPT-4.

Trouble is, to run the high-powered AI models, developers need high-powered chips – whatever the cost.