Germany agreed to allocate almost a third of the cost of a 30-billion-euro ($32.7 billion) plant in Magdeburg on Monday for US chip giant Intel subsidies after a months-long controversial debate. 

Government sources relayed to AFP that 9.9 billion euros would be provided to support the project, up from the initial amount of 6.8 billion originally set last year after it was revealed in March. 

This follows as the EU aims to boost semiconductor production for things ranging from fighter jets to smartphones to reduce dependence on Asia, in light of the war on Ukraine.   

The project was initially expected to cost 17 billion euros, according to government sources.   

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At a signing ceremony with Intel CEO Pat Gelsinger, German Chancellor Olaf Scholz called the agreement "the single largest foreign direct investment in German history".

According to the firm, the project would boost the entire production process, intensifying research of new technologies and upping the manufacturing and packaging of semiconductors. Intel also revealed that it could be a costly $87.9 billion over the next decade.

As Intel backs away from Germany, the market could take a hit after US giants within the chip industry, such as Lam Research and KLA Corporation, both of which make chip-manufacturing equipment, have suspended sales and services to Chinese chipmakers.

Meanwhile, the pressure caused ASML Holding, a Dutch-based chip equipment supplier, to implore its staff in the United States to stop exporting equipment to China.