After agreeing to subsidies of over €10 billion with Intel this week as the US chipmaker declared it would invest $33 billion in Germany, Germany will support specific initiatives in critical industries, a minister said.

Chancellor Olaf Scholz praised Intel's decision to build two chip manufacturing facilities in Magdeburg as the largest foreign investment in German history, while several analysts said that the subsidies would be better used to fund education.

"There will be no funding for everyone, but only for selected projects," said Economy Minister Robert Habeck of the Greens party which shares power with Scholz's Social Democrats and the FDP Free Democrats.

Following a meeting with Intel CEO Pat Gelsinger, Scholz made his comments just before the chancellor signed an agreement on Monday about a more than €30 billion investment by American chipmaker Intel in Magdeburg.

At a German Industry Day meeting earlier this year in Berlin, Scholz praised initiatives to increase the EU's proportion of the world's semiconductor output and noted that "every third chip produced in Europe comes from Saxony" in eastern Germany.

He stated that additional large chip producers are preparing to invest in the nation, possibly a nod to Taiwan's TSMC.

However, the €30 billion agreement with Intel also includes €10 billion in German state subsidies, which may be viewed as contentious at a time when Scholz is advocating for reductions in public spending.

Habeck emphasized the importance of semiconductors.

"They will be everywhere in future," he said at an event in Berlin, adding that the Intel subsidies were therefore an investment in economic security.

According to him, the government was also keeping a careful eye on the healthcare, telecommunications, energy, logistics and transport, food, and security services industries.

Habeck emphasized that the government had engaged in vigorous haggling with Intel. They did not obtain their desired results. Other sums were also on the table, he continued.

The European Commission has not yet given its approval to Berlin's intentions to subsidize Intel, according to the economy ministry.

Microchip demand fell globally in 2023, despite rising labor, building, and energy expenses. Even as he committed to the factory earlier this year, Intel's Gelsinger issued a 'headwinds' warning.