In the latest move to boost chip output in the region, global chipmakers STMicroelectronics and GlobalFoundries on Monday announced plans to build a semiconductor factory in France, with additional funding from the French government.
The announcement came as French President Emmanuel Macron is likely to announce almost EUR6.7 billion worth of investment from global majors at the Choose France summit this week.
Both the European Union and the United States have been soliciting domestic chip factories and offering billions in state subsidies in an effort to reduce dependency on Asian suppliers and mitigate a global chip shortage, which has recently created mayhem for car manufacturers.
The new facility will be located adjacent to STM’s existing plant in Crolles, and aims to reach full production capacity by 2026, manufacturing 620,000 silicon wafers a year, at a size of 18 nanometers. These are mainly used in automotive, internet-of-things and mobile applications.
While the companies did not disclose how much funding was required for the new plant, and how much of that investment would come from the French government, a person familiar with the matter said that the total investment would be about USD5.7 billion.
Macron’s office said the French President would visit the factory site and it represented an investment of more than 5.7 billion, without specifying the currency to which it referred.
The new manufacturing facility is scheduled to create approximately 1,000 new jobs, and will aid STMicro achieve its target of boosting revenue above USD20 billion.
In a statement, STMicroelectronics CEO Jean-Marc Chery said that the company will have more capacity to support its European and global customers in their transition to digitalisation and decarbonisation.
Relaxed funding rules for new chip factories
Earlier this year, the European Commission relaxed funding rules for new and innovative semiconductor factories under the European Chips Act. This is seen as an effort to double its global market share to 20 percent by 2030.
Earlier this year in March, chip manufacturing giant Intel divulged plans of a USD88 billion investment in Europe, choosing Germany as the location for its’ massive chipmaking complex. The company plans to build its new research hub in France, and in the process create more than 1,000 new technology jobs.
Intel will manufacture the latest 2-nanometer chips, which are comparatively newer than the STM-GlobalFoundries project.
Since the end of 2020, global chipmakers have witnessed a surge in demand from electronics manufacturers, as work-from-home fuelled a huge spike in the sale of gadgets, This surge led to a supply crunch for other industrial consumers such as automobile manufacturers and telecom companies.
However, research firms including the Gartner Group have predicted that sales of PC’s and smartphones will drop later this year, which would ease the supply of chips for other industries.