It was part of an effort to wean Europe off semiconductors made in China and Taiwan, with Mr Scholz saying the plant would help Germany “become one of the world’s major semiconductor production locations”.

The plant is scheduled to be the biggest-ever foreign investment in Germany, with Intel claiming it would create 3,000 permanent jobs and 7,000 construction jobs while it was being built.

The EU has outlined tens of billions in funding to help it double its share of semiconductor manufacturing to 20pc. The subsidies, which will not be paid until the plant is being built, have been controversial in Germany at a time of economic pressure and concerns about public spending.

Intel’s decision to delay work on the facility, which was expected to begin next year, has already sparked a row among members of Germany’s coalition government.

Finance minister Christian Lindner, of the centre-right Free Democratic Party, said the proposed subsidies should be used to plug a black hole in Germany’s budget, while economy minister Robert Habeck, of the Green party, said they should be deployed “for the good of the country”.

Mr Gelsinger said Intel’s facility in Ireland, on the outskirts of Dublin, would “remain our lead European hub for the foreseeable future”. The company recently sold a 49pc stake in the plant to private equity giant Apollo for $11bn (£8.3bn).

Intel, the company that invented the microprocessor and was once seen as the world’s most advanced semiconductor company, has fallen behind Asian rivals such as Taiwan’s TSMC and Samsung in advanced chip manufacturing in recent years.

It is also suffering as tech giants spend more on artificial intelligence chips designed by Nvidia rather than Intel’s traditional processors when building data centres.

The company is spending tens of billions of dollars as part of its turnaround, supported in part by US subsidies. However, its shares have fallen by 56pc this year and the company recently announced plans to cut 15,000 jobs, a sixth of its workforce, as well as suspending its dividend.

Intel shares jumped in after-hours trading on Monday as Mr Gelsinger announced the Germany delays, as well as a deal with Amazon to manufacture an AI chip.