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Germany’s budget woes risk dampening its chipmaking ambitions



Germany’s budget woes risk dampening its chipmaking ambitions

Germany’s budget crisis could affect plans to hand out billions of euros in government subsidies to chip companies, potentially stymying its hopes of playing a significant role in the global semiconductor industry.

The German government has promised vast amounts of state support to international chipmakers investing in Europe’s largest economy. Intel, which is spending €30bn ($32.5bn) on two new factories in the eastern town of Magdeburg, is to receive €9.9bn in grants for its project, the largest foreign investment in the country’s postwar history.

But doubts about state support have grown ever since a bombshell judgment by the German constitutional court last month which has plunged the government’s spending plans for 2024 into disarray.

Politicians, industry experts and business leaders fear the semiconductor projects might fall victim to the budget imbroglio, an outcome they warn could inflict huge damage on Germany’s reputation.

“It would be an utter disaster for the image of Germany as a place to invest, because it would show that you just can’t rely on this country any more,” said Sven Schulze, economy minister of the eastern state of Saxony-Anhalt, where Intel is to build its fabrication plant.


“It would be a devastating blow, one we haven’t really seen before in our postwar history,” he told the Financial Times.

The crisis was ignited when Germany’s top court ruled that the government had violated the constitution by moving €60bn in credit lines earmarked for dealing with the Covid-19 pandemic into the “climate and transformation fund” — an off-budget vehicle it has been using to finance Germany’s industrial modernisation.

The subsidies for Intel and other chipmakers such as Taiwan-based TSMC were all supposed to come from the climate fund. The ruling sowed alarm among companies — not just the chipmakers but also other big groups that were due to receive grants, such as steelmakers who are investing vast sums to switch to carbon-neutral production.

The crisis strikes at the heart of one of Germany’s most important policies — its plan to become a big chip producer. That in turn forms part of a broader EU strategy to strengthen supply chains, enhance economic resilience and reduce the bloc’s dependency on Taiwanese suppliers — a potential vulnerability in the event of a confrontation between China and Taiwan.

Intel is not the only big investor Germany has attracted. TSMC, the world’s biggest contract chipmaker, has said it would invest €10bn in a new factory in the eastern city of Dresden, together with Dutch semiconductor maker NXP and Germany’s Bosch and Infineon. This fab has been promised €5bn in subsidies.


Meanwhile, Infineon is building a €5bn plant, also in Dresden, Bosch is investing €250mn to expand its Dresden cleanroom and US chipmaker GlobalFoundries is in the fourth year of an expansion of its wafer manufacturing capacity in the city. All three are banking on generous state support.

German Chancellor Olaf Scholz told a conference last month that he “absolutely wants” the chip factories to go ahead as planned. “It’s an important signal for the future, for all of us, that semiconductors are produced in Europe, especially in Germany, and particularly in eastern Germany,” Scholz said.

Schulze, who is a member of the opposition Christian Democrats, said he hoped Scholz was serious. “I’m not worried about the Intel investment because the chancellor has given a personal assurance it will proceed,” he said. “And if you can’t trust his word then you might as well give up on this government.”

But Robert Habeck, deputy chancellor and economy minister, told an event last week that the government might be forced to curb its ambitions when it came to subsidies, “deprioritising . . . one or the other project that doesn’t meet the strictest definition of carbon neutrality and economic security”.

Scholz, Habeck and finance minister Christian Lindner are holding crisis talks on how to resolve the budget impasse and cobble together a revised spending plan for 2024, with Habeck calling off a planned trip to the UN climate summit in Dubai to focus on the issue.

German Chancellor Olaf Scholz, back right, shakes hands with Intel chief executive Pat Gelsinger in June after the US chipmaker announced it was spending €30bn on two new factories in the eastern town of Magdeburg. State secretary at the chancellery Jörg Kukies, front right, shakes hands with Intel executive vice-president Keyvan Esfarjani
German Chancellor Olaf Scholz, back right, shakes hands with Intel chief executive Pat Gelsinger in June after the US chipmaker announced it was spending €30bn on two new factories in the eastern town of Magdeburg. State secretary at the chancellery Jörg Kukies, front right, shakes hands with Intel executive vice-president Keyvan Esfarjani © Odd Andersen/AFP/Getty Images

Intel and TSMC declined to comment on whether they feared their promised subsidies were at risk.

But people briefed on TSMC’s communications with Berlin said that if the German government reduces its subsidy commitment, the company may have to renegotiate the terms of its Dresden fab, including with its German joint-venture partners.

“Worst case is that if it turns out nine months from now that there will be no subsidies, we will have to cancel the project,” said one person.

Other companies have publicly expressed their concern about the effects of the court’s verdict. German automotive supplier ZF, which is building a chip factory in the western region of Saarland with US group Wolfspeed, said it was worried about the consequences for Germany as a place to do business.

“It’s a question of whether important industrial transformation projects can get off the ground in Germany or whether the future happens in other parts of the world,” ZF said.

Lindner has tried to dispel investors’ fears. “Agreements we’ve reached which are legally binding will be honoured,” he said in an interview with media outlet The Pioneer on Monday.


An example is the €564mn subsidy for Northvolt, the Swedish technology group building a battery factory in northern Germany. Habeck’s economy ministry announced on Sunday that it had won an exemption from the spending freeze imposed on the climate fund which would allow for the Northvolt subsidy to be paid.

But many of the agreed subsidies are not as far along as Northvolt’s. Of the 31 microelectronic projects given a green light by the European Commission last June under state aid rules, only 15 have received a formal promise of funding. Industry insiders say the rest risk being deprived of any government support.

“Anyone you speak to in the chip industry who has a project in Germany and has yet to receive a legally binding contract from the government is scratching their heads,” said one executive with knowledge of the subsidy issue.

Another executive at a chipmaker was more forthright. “Germany is not just the sick man of Europe — it turns out it’s also the dumb man of Europe,” he said. “This is a total fiasco.”

Additional reporting by Kathrin Hille and Richard Milne

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Vladimir Putin warns of wider conflict over Ukraine



Vladimir Putin warns of wider conflict over Ukraine

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Vladimir Putin has said that western support for Ukraine risks triggering a global war, in his most explicit threat to use nuclear weapons since he ordered the full-scale invasion of Ukraine two years ago.

In his state of the nation speech on Thursday, the Russian president said claims that his country might attack Europe were “nonsense”, but warned that Russia could strike back against western countries in response.

Putin said in the address to the country’s political elite that western support for Ukraine “really risks a conflict using nuclear weapons, which means the destruction of all of civilisation”.


Referring to French President Emmanuel Macron’s refusal to rule out sending western troops to Ukraine this week, Putin said Russia remembered “the fate of those who once sent their contingents to our country. Now the consequences for possible interveners will be much more tragic”.

“We also have weapons that can strike targets on their territory,” Putin added. He said western supplies of advanced weaponry and the prospect of a Nato troop deployment risked nuclear conflict.

Putin added: “They think this is some kind of game. They are blinded by their own superiority complex.”

The Kremlin had billed Putin’s speech as a road map for the next six years of his rule ahead of Russia’s presidential elections next month, in which he faces no credible challengers after 24 years in power, having quashed most opposition and outlawed dissent.

Pro-Kremlin cinema owners across the country held free screenings of the speech, which began at midday in Moscow. But even as Putin devoted the bulk of it to social support programmes for mothers and attempts to cut dependence on imported technology, the speech revealed how far the war in Ukraine and his strategic rivalry with the west has consumed his attention.


“Instead of Russia, they need some dependent, declining, dying space where they can do whatever they want,” Putin said of the west.

Putin confirmed Russia would beef up troop deployments on its border with Nato countries to “neutralise threats” created by Sweden and Finland joining the alliance following his invasion of Ukraine.

Though Putin said Russia was prepared to hold talks with the US on arms control, which has essentially collapsed since the full-scale invasion, he made it clear Russia was also interested in ramping up its ability to strike western countries.

He boasted that the country’s nuclear forces were fully ready for use, and added that work would soon conclude on new weapons systems that he claims are essentially impossible to shoot down.

“We are dealing with a state whose ruling circles are taking openly hostile actions against us. They are planning in all seriousness to discuss strategic stability with us while simultaneously, as they say themselves, trying to inflict a strategic defeat on us on the battlefield,” Putin said.


Denying US claims that Russia plans to deploy a nuclear weapon in space, Putin accused the west of trying to “drag us into an arms race, repeating the trick they played with the Soviet Union in the 1980s,” when the USSR overspent on its military, hastening its collapse in 1991.

He said Russia would work to “create the outlines for equal and inseparable security in Eurasia,” adding that “without a sovereign, strong Russia, no stable world order is possible”.

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Crowded field of potential McConnell successors emerges in Senate



Crowded field of potential McConnell successors emerges in Senate

Several potential successors are being eyed to fill outgoing Republican Minority Leader Mitch McConnell’s role as the party faces growing division between more mainstream Republicans and a faction of hardline conservative members.

Among those who are being floated as a potential replacement for the leadership position are senators John Cornyn, R-Texas; John Thune, R-N.D.; John Barrasso, R-Wyo.; Rick Scott R-Fla.; Tom Cotton, R-Ark.; and Steve Daines, R-Mont. 

McConnell, who turned 82 last week, announced in a floor speech Wednesday he will step down from leadership in November. The Kentucky Republican is the Senate’s longest-serving party leader in history.

Speculation about Thune, Barrasso or Daines taking over as leader stems from their current roles in GOP leadership. They serve as Republican whip, Senate Republican Conference chairman and National Republican Senatorial Committee chairman, respectively. 



There are several potential successors for Republican Minority Leader Mitch McConnell. (Getty Images)

“Chairman Daines is laser-focused on taking back the Senate majority,” NRSC communications director Mike Berg told Fox News Digital.

One source familiar with Senate Republican conference discussions shared that the “three Johns” — Thune, Cornyn and Barrasso — are not of the same political stripe. Barrasso is considered the most conservative out of the three, the source said. Barrasso is also believed to be a more palatable option for the various factions of Republicans in the Senate who don’t always see eye to eye. He notably endorsed former President Trump early last month.


“What I’m focused on is the election,” Barrasso told reporters shortly after McConnell’s announcement.


As for decisions regarding leadership, he said, “I’m going to talk to members of the conference, hear what they have to say, listen to them in terms of what direction that they want to take with us.”

Both Cornyn and Thune also endorsed Trump after Barrasso. Thune had initially endorsed fellow Sen. Tim Scott R-S.C., who ultimately dropped out and endorsed Trump. 

Sen. Rick Scott was more pointed in his statement following McConnell’s surprise announcement, saying in a statement, “I have been very clear and have long believed that we need new leadership in the Senate that represents our voters and the issues we were sent here to fight for.”

Senate Minority Leader Mitch McConnell has long been an opponent of Russian geopolitical machinations.

Senate Minority Leader Mitch McConnell has long been an opponent of Russian geopolitical machinations. (AP Photo/Mark Schiefelbein)

When Scott challenged McConnell for the position, Sen. Mike Braun, R-Ind., told reporters McConnell received 37 votes from conference members, while Scott received 10. One Republican voted “present.” Some of those who reportedly voted against McConnell were senators Josh Hawley, R-Mo; Ted Cruz, R-Texas; Braun; Ron Johnson, R-Wis.; and Lindsey Graham, R-S.C. 

Sen. Mike Lee, R-Utah, who supported Scott in 2022, would welcome Scott’s leadership if he were to take over, a staffer in Lee’s office told Fox News Digital.



The source also shared that Cotton was being mentioned as a potential contender for the position. Cotton’s office couldn’t immediately be reached for comment. 

Cornyn, who does not hold a leadership position in the GOP and is poised to launch a potential bid for leader, said in a statement Wednesday that “today is about Mitch McConnell.”

“But I’ve made no secret about my intentions,” he added.

Cornyn on his timeline: “Not today.”


Cornyn also endorsed former President Trump to be the Republican presidential nominee, and some lawmakers have begun looking to the likely GOP candidate for guidance about who should replace McConnell.

Donald Trump wearing a red make america great again hat

A new article from The Atlantic warned that House Democrats may vote against certifying former President Trump’s election if the U.S. Supreme Court doesn’t rule whether he is eligible for office beforehand. (Sean Rayford/Getty Images)

Sen. Tommy Tuberville, R-Ala., told reporters Wednesday the next person “absolutely” needs to have a more positive relationship with Trump, adding, “He’s going to be the next president, we have to work together.”

Sen. Roger Marshall, R-Kan., agreed. 

“It’s so important that the next leader have a very positive relationship with the president,” Marshall told Fox News Digital in an interview Wednesday. “I think that this next leader needs to have a little bit more, maybe a lot more of a populist view.”



Marshall, who positioned himself alongside conservative hardliners who were critical of McConnell and voted against the bipartisan border deal in the national security supplemental package this month, added that the names being floated for leadership have been “interviewing for the job since I got here.”

“I watch how they vote. I watch what their priorities are. I’ve been watching their volume on what issues they’re championing,” he said. “All the names … have great qualities. They would do a fine job. But I’ve not even started a process of weeding them out. And I tell you, it’ll be one of the toughest decisions I’ve ever made.”

Fox News’ Chad Pergram contributed to this report. 

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US Supreme Court will hear Donald Trump presidential immunity appeal



US Supreme Court will hear Donald Trump presidential immunity appeal

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The US Supreme Court has agreed to take up an appeal over whether Donald Trump is immune from criminal prosecution for acts committed in office, putting another potentially blockbuster case involving the former president on the high court’s docket ahead of the 2024 election.

The order on Wednesday will further delay a trial in a criminal case filed by the Department of Justice accusing Trump of seeking to overturn the results of the 2020 election. It will also give the high court — three of whose members were appointed by the former president — the chance to issue a landmark ruling on a question that could have major consequences for the upcoming election and for the presidency more broadly.

The Supreme Court set oral arguments in the matter for the week of April 22, with a decision expected in the case by the end of its term, which usually concludes in late June.


It had previously refused a request from Jack Smith, the DoJ special counsel overseeing federal criminal cases against Trump, to bypass the US Court of Appeals for the District of Columbia Circuit, an intermediate appeals court, and hear the presidential immunity matter immediately last year.

Earlier this month, that court handed down a unanimous ruling that barred Trump from using presidential immunity as a shield against the DoJ indictment.

Lawyers for Trump subsequently asked the Supreme Court to put the appeals court order on hold while he appealed against the decision. They argued that a “claim that presidents have absolute immunity from criminal prosecution for their official acts presents a novel, complex, and momentous question that warrants careful consideration on appeal”.

The Supreme Court on Wednesday said the appellate court’s order would remain on hold until it resolves the issue. The federal elections trial was originally set to begin on March 4 but has been postponed.

Had the court not taken the case, the lower appeals court’s ruling would have remained in place and proceedings in the trial court could have resumed imminently. It is unclear now whether Trump will face trial in the case before the election in November, when he is likely to face Joe Biden in a rematch of 2020.


Smith had warned the Supreme Court that a “delay in the resolution of [the election] charges threatens to frustrate the public interest in a speedy and fair verdict”.

Trump reacted to the decision with satisfaction, suggesting he sees it as a big legal victory. “Legal Scholars are extremely thankful for the Supreme Court’s Decision today to take up presidential immunity,” he said, adding: “Without presidential immunity, a president will not be able to properly function, or make decisions, in the best interest of the United States of America.” 

Democrats were extremely critical both because of the delay that the decision would bring to Trump’s trial, and concern that some justices on the court, with a 6-3 conservative majority, may be sympathetic to the former president’s argument that he is immune from prosecution for his official actions while in office. 

“The Supreme Court is placing itself on trial with this decision to hear the former president’s total immunity claim,” Nancy Pelosi, the California congresswoman and former House speaker, wrote on X. “It remains to be seen whether the justices will uphold the fundamental American value that no one is above the law — not even a former president.”

The high court has previously ruled on presidential immunity against civil claims, but it has yet to address the issue in relation to criminal charges.


Daniel Richman, a professor at Columbia Law School, said that even if the high court decides the case speedily, “a determination that the prosecution can proceed will leave the district court hard-pressed to schedule a trial before the general election”.

“Arguments that Trump and the people have a strong first amendment interest in presenting his views to the electorate are substantial, and may well counsel against requiring him to sit in the courtroom instead of campaigning,” he added.

The DoJ declined to comment.

Trump’s latest presidential campaign has been unfolding alongside a jam-packed legal calendar as he faces cases in courts across the country. Most recently he was slammed with a penalty of more than $450mn, including interest, in a civil lawsuit in New York over “blatant” fraud committed by his real estate empire. An appeals court judge in New York on Wednesday declined to pause enforcement of that judgment while Trump appeals.

He faces a total of 91 criminal charges across four separate cases. The DoJ and the state of Georgia have separately charged Trump with meddling in the 2020 election. Another federal indictment accused him of mishandling sensitive government documents.


The first case to reach trial will be one brought by Alvin Bragg, Manhattan district attorney, who alleged that Trump made “hush money” payments to porn actress Stormy Daniels in the lead-up to the 2016 election. Proceedings are set to start on March 25.

According to recent polling, Americans see the federal case related to the 2020 polls as the most serious for Trump, and a conviction in the case could lead to a drop in support for him in the general election.

The Supreme Court has also taken up another politically sensitive case involving Trump. It is poised to decide whether he can be barred from Colorado’s primary ballot in the presidential election, after a ruling from that state’s high court determined he was ineligible to hold office. It heard oral arguments in the case earlier this month.

An Illinois court on Wednesday joined Colorado and Maine in throwing Trump off the state’s presidential primary ballot on the basis that he engaged in insurrection. The evidence in the case is linked to the January 6 2021 attack when his supporters stormed the US Capitol in an attempt to halt the certification of Biden’s victory. The order remains on hold pending a potential appeal and the Supreme Court’s decision in the Colorado case.

Trump’s campaign called the Illinois ruling “unconstitutional” and vowed to “quickly” appeal against it.


Additional reporting by James Politi

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