Eastern German chip factory dropped

28 November 2003

FRANKFURT/ODER- One of the last hopes for the economically hard-hit eastern German state of Brandenburg was dashed Friday when a major chip factory project fell through for lack of financing.

A spokesman at the Communicant AG company told Deutsche Presse Agentur dpa that the company will file for liquidation in a move sealing the fate of the project which for months had been in trouble.

The spokesman said that the move had to be taken after the main project backer, Dubai, failed to make any further payments. Lacking these, the federal German state was unwilling to provide financing guarantees.

Originally the project in the border city of Frankfurt an der Oder was to have seen investments of some EUR1.3 billion for a plant to manufacture super high-speed chips.

The US chip firm Intel was also involved in the project based on a technology developed by a German scientific institute, with investment backing from Dubai.

But over last summer and through the fall, the chances for the project dwindled amid the questions raised about the costs. Brandenburg state Premier Matthias Platzeck last month admitted that the chip plant – already half completed – could only be finished with major changes.

Media reports said the German federal government was planning to cancel its loan guarantee because it saw no chance of the plant ever making money.

An analyst at the Institute for German Economics in Berlin, Karl Brenke, warned in October that projects which had to be funded 90 percent by the state, were clearly being built on sand.

He called the chip plant a “crazy project” in view of an investment calling for EUR one million for each of the 1,500 jobs foreseen.

DPA
Subject: German news